Kalshi has exceeded a $2 billion annualized revenue run rate, leading the prediction market operator to start preliminary conversations with investment banks about a potential initial public offering, as reported by The Information.
Summary
- Kalshi has reportedly begun initial discussions about an IPO with investment banks following an impressive $2 billion annualized revenue run rate.
- The platform achieved a trading volume of $16.81 billion in May and raised $1 billion in funding, resulting in a valuation of $22 billion.
As cited by The Information, sources familiar with the matter indicate that Kalshi is engaged in informal IPO discussions while maintaining strong business growth. This revenue figure marks a considerable increase from the $1 billion annualized run rate reported by The Wall Street Journal in March.
A spokesperson from Kalshi declined to comment on the IPO discussions when contacted by The Block.
The renewed interest in going public follows a recent $1 billion Series F funding round, led by Coatue, with participation from Sequoia Capital, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley, and ARK Invest, contributing to the $22 billion valuation.
Trading activity has shown a consistent upward trend. According to data from DeFiLlama, Kalshi recorded $16.81 billion in trading volume for May, up from $14.81 billion in April. In contrast, competitor Polymarket saw a decrease, with $7.08 billion in volume last month, down from $9.01 billion previously.
Increasing Regulatory Scrutiny Amid Business Expansion
The rise in trading volumes and investor interest has coincided with growing scrutiny from lawmakers, gaming organizations, state regulators, and federal authorities regarding prediction market regulations in the United States.
Recently, various U.S. gaming industry groups urged the Senate to incorporate language in upcoming crypto market structure legislation that would specifically exempt sports and casino-style prediction markets from federal derivatives regulations, according to a Semafor report.
Organizations supporting this initiative included the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers. In a letter cited by Semafor, these groups argued that prediction market operators have effectively broadened sports betting across the country while evading state and tribal gaming regulations.
This push coincides with ongoing discussions regarding the CLARITY Act, a major crypto market structure proposal that has already advanced through the Senate Banking Committee.
Political opposition has also triggered legal challenges at the state level. Kentucky recently became the latest state to sue Kalshi, Polymarket, and related entities, claiming they operated illegal and unlicensed sports betting platforms. Similar lawsuits have emerged in various jurisdictions, including Ohio, Nevada, New Jersey, Maryland, Montana, Illinois, New York, Connecticut, Arizona, Wisconsin, New Mexico, and others.
Federal and State Regulators in Conflict
Legal disputes surrounding prediction markets increasingly center on a jurisdictional conflict between state gaming authorities and the Commodity Futures Trading Commission (CFTC).
Recently, the CFTC filed a lawsuit against New Mexico after state officials took action against Kalshi, asserting that it offered unlicensed sports betting products. In its complaint, the regulator argued that event contracts on federally regulated exchanges fall under its exclusive jurisdiction per the Commodity Exchange Act, thus exempting them from state gaming enforcement.
CFTC Chair Michael Selig remarked at the time that New Mexico was attempting to override established laws and judicial precedents regarding federally regulated exchanges.
Simultaneously, critics have questioned whether sports-related event contracts should be classified under derivatives regulations. Former CFTC Chair Gary Gensler recently informed the Sixth Circuit Court of Appeals that sports prediction contracts do not function like traditional swaps, as they are not intended to hedge commercial or economic risks.
Despite the criticism, federal regulators continue to advocate for their oversight role while working on a framework that would evaluate event contracts individually rather than imposing broad restrictions. According to a Wall Street Journal report published this month, the agency is considering standards that would impose stricter scrutiny on certain contracts while allowing others to remain accessible.
