Kalshi raises $1B at $40B valuation as it expands into crypto and stock perpetual futures

The funding round, announced Thursday, was co-led by Sequoia Capital and Wellington Management, with participation from Tiger Global Management and Dragoneer Investment Group, according to Reuters. Kalshi's valuation has increased nearly 82% from the $22 billion it secured in May, when the company completed another $1 billion financing round led by Coatue Management.

Expansion Beyond Prediction Markets

The latest investment comes as Kalshi seeks to transform its business from a platform primarily known for sports and political event contracts into a broader financial exchange. The company plans to use the capital to develop new trading products, including leveraged event contracts, perpetual futures tied to individual stocks and markets for trading the price of AI computing capacity.

Kalshi entered the perpetual futures market in May after receiving approval from the Commodity Futures Trading Commission, becoming one of the first federally regulated exchanges to introduce the popular crypto derivatives product in the US. The platform initially offered cryptocurrency perpetual futures before expanding into equity indexes and precious metals, including gold and silver.

Unlike traditional futures contracts, perpetual futures have no expiration date, allowing traders to maintain exposure without periodically rolling positions into new contracts. These products can also offer leverage, amplifying both potential gains and losses.

Institutional Demand Drives Growth

Kalshi's latest financing follows a period of rapid growth driven by increased trading activity around major sporting events and elections. The 2026 FIFA World Cup, NFL season and upcoming US midterm elections have contributed to rising demand for its event contracts.

The platform has also experienced growing interest in combination contracts, which allow users to take positions on multiple outcomes within a single trade. Kalshi's valuation has climbed from $5 billion in October 2025 to $40 billion a year later, an eightfold increase.

Regulatory Challenges Ahead

Kalshi's expansion comes amid growing legal scrutiny over whether sports-related prediction contracts should be regulated as financial derivatives or gambling products. Earlier this week, Utah's attorney general brought criminal charges against Kalshi and two senior executives, accusing the company of illegally promoting online gambling.

The dispute is part of a broader conflict between state authorities and federally regulated prediction market operators. Two US appeals courts ruled in August and September that states have authority to regulate sports-related event contracts, while another appeals court previously sided with Kalshi's argument that federal regulation takes precedence.

Despite the legal uncertainty, the company is moving ahead with plans to develop leveraged trading products and expand institutional participation. Kalshi has also discussed the possibility of taking the company public, although an initial public offering would not occur before 2027.