Kalshi closes $185M round as rival Polymarket reportedly seeks $200M

Kalshi has successfully raised $185 million in a funding round led by the crypto-focused venture capital firm Paradigm. This influx of capital elevates the company’s valuation to $2 billion, as confirmed by representatives from both Paradigm and Kalshi. Matt Huang, the co-founder and managing partner at Paradigm, expressed his excitement in an email to TechCrunch, likening prediction markets to the early days of cryptocurrency. He stated, "Prediction markets remind me of crypto 15 years ago: a new asset class on a path to trillions. There’s no better team than Kalshi to scale prediction markets and reshape how people think about everything from elections and economic markets to weather and sports." This announcement follows reports from Bloomberg indicating that Kalshi’s main competitor, Polymarket, is in the process of raising $200 million at a pre-money valuation of approximately $1 billion, led by Founders Fund. However, this deal is still in the works and not yet finalized, according to sources. Notably, Polymarket has faced regulatory challenges, having been banned in the U.S. since 2022 due to an agreement with the Commodity Futures Trading Commission (CFTC). Other countries, including the United Kingdom, France, and Singapore, have also imposed restrictions on the platform. Regulators argue that such platforms either constitute betting markets that require proper licensing or securities markets that need regulation. Conversely, Kalshi has successfully navigated regulatory hurdles, reaching an agreement to operate under the CFTC’s oversight, allowing U.S. residents to use their platform freely. While some investors may be drawn to the allure of an unregulated market, many venture capitalists prefer to mitigate risks. If Founders Fund proceeds with a significant investment in Polymarket, it could signify potential progress towards lifting the existing ban, especially under a more crypto-friendly administration. In a surprising move, Polymarket recently partnered with Elon Musk’s X, designating it as X’s “official” prediction market, although specifics about the partnership remain limited.