Polymarket Fields Offer for $9 Billion Valuation; Kalshi Nears $5 Billion Valuation
The Takeaway
- Polymarket offered $9 valuation jump following CFTC green-light
- Rival Kalshi nears $5 billion-valuation deal
- Trading volume has jumped at both in the last year
Startups that enable people to bet on events such as the New York mayoral race, NFL games and the Federal Reserve rate decisions are in talks to raise more money at multi-billion-dollar valuations, as trading volume and rivalry between the two apps intensifies.
Polymarket has considered an offer that would value the company as much as $9 billion, according to people who have spoken to the company’s leaders. That would be a huge jump in price for the startup, which raised money at a $1 billion valuation earlier this summer and is on the cusp of re-entering the U.S. market, but doesn’t yet generate revenue.
Meanwhile, older rival Kalshi is close to raising money at a $5 billion valuation including the new money, which would more than double the $2 billion valuation the startup raised at just three months ago, according to two people who have spoken to its leaders.
The fundraising discussions follow growth in trading volumes for event contracts—derivatives that pay out to investors who guess the event outcomes correctly— after the markets gained attention ahead of the 2024 U.S. presidential election. Both startups have recently moved to expand the ways customers can buy their contracts.
Polymarket earlier this month said the Commodity Futures Trading Commission had given it the go-ahead to serve U.S.-based users. The agency had barred it from accepting U.S.-based trades three years ago, saying it was running an unregistered derivatives exchange. In July, the five-year-old startup bought a U.S.-registered exchange and clearinghouse, which helped pave the way for the CFTC approval.
Trading volume on Polymarket hit $1 billion in August, more than twice its volume a year ago, according to Dune Analytics, which tracks activity on blockchains. Polymarket clears trades using cryptocurrency, saving the platform the trouble of coordinating with banks and payments providers in each country. Customers use Circle’s USDC stablecoin to buy contracts predicting outcomes of political, sporting or global events. They receive a payout if they predict correctly.
Polymarket doesn’t generate revenue but could at some point by charging fees on trades. It has also discussed launching a token, though there’s no timeline on that yet, The Information reported last year.
Kalshi has tried to distinguish itself by touting the fact that it already operates with U.S. regulatory oversight. Trading volume on Kalshi hit $875 million in August, according to an analysis of Kalsh’s public data compiled by a Dune Analytics user.
Kalshi generates revenue from charging a transaction fee on the expected earnings of a contract. In August, it announced a partnership with trading app Robinhood to offer contracts predicting the outcome of NFL and college football games on the app.
Investors have chased this growth. In June, crypto VC firm Paradigm led a $185 million investment into Kalshi at a $2 billion valuation. The financing brought its total funding to $415 million. Multicoin Capital, Sequoia Capital and Citadel Securities CEO Peng Zhao have previously invested.
Around the same time, Polymarket raised more than $200 million at a $1 billion valuation in an investment led by Founders Fund. Polymarket said in late August that Donald Trump, Jr. had joined its advisory board and that 1789 Capital, a VC firm at which Trump, Jr. is a partner, had made a strategic investment. Other investors include General Catalyst and Polychain Capital.