Polymarket in Talks to Raise Money at About $15 Billion Valuation
The Takeaway
- Polymarket in talks to raise $400 million in new funding at about a $15 billion valuation.
- Investment would add to $600 million from NYSE parent in March.
- Company recently launched U.S. platform.
The predictions site Polymarket is talking to investors about raising $400 million in funding at a valuation of about $15 billion including the new money, according to two people familiar with the talks.
The financing would add to the $600 million already invested in the funding round by Intercontinental Exchange, the parent of the New York Stock Exchange, which the exchange announced last month without disclosing the valuation. It’s looking to add additional strategic investors beyond Intercontinental Exchange to the round, which could total $1 billion, said a second person.
The round hasn’t closed and the terms could change.
A valuation at that level would diverge significantly from that of its rival Kalshi. Last month, Kalshi was finalizing raising $1 billion at a $22 billion valuation led by Coatue Management. Still, Polymarket’s new valuation would be more than 66% higher than its October round last year, when it raised $1 billion from Intercontinental Exchange at a $9 billion valuation after the investment.
One likely reason for the valuation difference: Polymarket, the biggest prediction market outside the U.S., only recently launched a platform to serve U.S. customers and has just started to charge fees to generate revenue. Kalshi, in contrast, has been serving U.S. customers and its annualized revenue has risen to $1.5 billion, Bloomberg reported last month.
Unlike Kalshi, the six-year-old startup settles trades on a blockchain. For more than a year it has discussed issuing a token—a digital asset commonly issued by crypto projects. It also plans to eventually pursue an initial public offering, according to people familiar with its thinking.
The company’s fundraising discussions follow a spike in activity on prediction markets, which became popular ways to bet on the outcome of the 2024 U.S. presidential race. Both Kalshi and Polymarket allow users to purchase event contracts—derivatives that pay out to investors who guess event outcomes correctly—for less than $1. Users pay for the contracts up front; if they guess correctly, they make the money back plus a profit.
The low stakes and broad range of bets on events, from the March Madness winner to outcomes of the U.S. invasion of Iran to the timing of AI model releases, have made them a popular alternative to sports betting and stock trading.
The timing of some well-placed bets have raised concerns about insider trading, though. Earlier this year, OpenAI fired an employee for trading on prediction markets using confidential company information. More recently, amid news reports pointing to winning bets related to the U.S.-Iran war, bi-partisan lawmakers have proposed legislation to ban federally elected officials and government employees from using insider information to bet on prediction market contracts.
Polymarket has already had a run-in with regulators: In 2022, the Commodity Futures Trading Commission, which regulates derivatives trading, banned it from accepting U.S.-based trades because it hadn’t received regulatory approval to do so. After Polymarket last year bought a U.S.-registered derivatives exchange and clearinghouse, it received approval to launch a new platform for U.S. users.
Both Polymarket and Kalshi have taken steps to crack down on insider trading.
Kalshi, meanwhile, is battling lawsuits against several state regulators, which are seeking to stop it from offering sports bettings, a major source of tax revenue for some states. Kalshi has said the charges are meritless and that it is regulated by federal regulator, the CFTC.