Prediction market platform Kalshi has reportedly secured $185 million in a Series C funding round, catapulting its valuation to $2 billion. This investment round, led by Paradigm, signifies a growing confidence among investors in the burgeoning prediction market sector. Sequoia Capital, Multicoin Capital, Neo, Bond Capital, and Citadel Securities CEO Peng Zhao also participated in the funding round.

Kalshi plans to allocate a portion of the newly acquired funds to expand its technology team and facilitate the integration of its prediction contracts into additional brokerage platforms. Currently, Kalshi contracts are accessible through Webull and Robinhood Markets. CEO and co-founder Tarek Mansour has expressed his ambition to establish Kalshi as the foremost financial market globally, emphasizing the company's commitment to innovation and market leadership.

This funding round arrives amidst significant regulatory developments impacting Kalshi's operations. In May 2025, the U.S. Commodity Futures Trading Commission (CFTC) dismissed its appeal against a court decision that had previously allowed Kalshi to offer political event contracts. This legal dispute revolved around whether these contracts violated federal commodities laws against gambling. The CFTC's decision potentially paves the way for the regulation of political prediction markets in the United States.

However, Kalshi is also navigating legal challenges at the state level. States like New Jersey, Maryland, and Nevada have issued cease and desist orders, questioning Kalshi's right to offer sports event contracts, arguing that these resemble traditional sports wagers and should fall under state oversight. Kalshi has responded by filing lawsuits and has secured favorable federal rulings in New Jersey and Nevada. The company asserts its operations are under federal jurisdiction as a CFTC-regulated exchange.

The rise of prediction markets like Kalshi has sparked debate about their legality and regulatory framework. Some critics argue that event contracts are essentially bets or wagers, potentially violating the Federal Wire Act. Others maintain that prediction markets are distinct from traditional betting, offering a platform for users to trade on the outcomes of events. The Competitive Enterprise Institute (CEI) has called for the CFTC to allow prediction markets as futures trading venues under federal law, emphasizing their potential as a novel asset class.

Kalshi's valuation also surpasses that of its competitor, Polymarket, which is reportedly closing a $200 million funding round at a $1 billion valuation. A key differentiator is that Kalshi is federally regulated and authorized to operate in the United States, while Polymarket is not. Both platforms experienced a surge in activity during the November 2024 U.S. presidential election, demonstrating the appeal of prediction markets. Kalshi offers predictions on diverse topics, including cryptocurrency, economics, weather, and ongoing events, with a significant portion of its trading volume coming from the sports category.