Kalshi and Polymarket are in early-stage talks to raise new funds that could value each of the platforms at around $20 billion. On Friday, The Wall Street Journal reported the potential valuations after speaking with people familiar with the discussions. These negotiations remain preliminary and may not produce finalized deals.
Kalshi is operating legally in the United States. It allows users to trade based on political events, sports outcomes, economic indicators, and cultural events.
The last round of funding was conducted in December, valuing the company at around $11 billion. The investors during the last round included Paradigm and Sequoia Capital.
Kalshi and Polymarket Strengthen Market Presence
This prediction market was established in 2018 by Tarek Mansour and Luana Lopes Lara. It was given approval by the US Commodity Futures Trading Commission to run a regulated exchange based on event markets in 2020.
It has since expanded rapidly. The platform recently exceeded a $1 billion revenue run rate, with some estimates placing it closer to $1.5 billion.
Polymarket was established in 2020 under the leadership of Shayne Coplan. It is inaccessible to US citizens without a virtual private network.
The firm will launch a regulated version that can be used by citizens within the US later this year. Its valuation was at around $9 billion in October after Intercontinental Exchange agreed to invest up to $2 billion.
There is increased attention from lawmakers and regulators on prediction platforms. Democratic lawmakers in the U.S. are planning to introduce legislation to address the risks associated with event-driven markets.
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This comes amid increased concerns following trades on the Polymarket platform that coincided with strikes between the U.S., Israel, and Iran. These trades raised questions about the use of advance knowledge.
Polymarket Faces Growing Allegations of Insider Trading
Democratic Senator Chris Murphy alleged individuals with access to critical information of betting on news before it was made public. It was reported that several accounts on the Polymarket platform made around $1 million from trades opened hours before explosions were reported in Tehran.
There were increased concerns over insider trading on the Polymarket platform. A group of crypto wallets earned more than $1.2 million by betting on an investigation into the DeFi platform Axiom just before blockchain analyst ZachXBT published allegations involving insider trading
In another case, a Polymarket account earned about $400,000 from a wager on the capture of Venezuelan President Nicolás Maduro before the information was made public.
The platforms are expanding despite the increased regulatory pressure. The valuation figures of the platforms indicate increased investor interest and demand for event-driven markets.
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