Kalshi is negotiating a new funding round that could value the prediction market platform at approximately $40bn, according to people familiar with the matter. The company, which previously raised $1bn at a $22bn valuation in May, could close the deal as early as the third quarter. This rapid valuation surge — up from $11bn in December 2025 and $5bn earlier that year — reflects explosive growth in binary betting markets.

The platform attracted over $17bn in trading volume last month, up sharply from less than $5bn a year ago. Sports bets dominate activity, representing roughly 65% of volume, while multi-leg combo wagers launched in September have proven particularly popular. Kalshi shot to prominence after correctly predicting Donald Trump's 2024 election victory and has since expanded into wagering on everything from weather outcomes to S&P 500 movements.

The fundraising push coincides with mounting regulatory pressure. Arizona filed criminal charges in March, accusing the company of operating an unlicensed gambling business. A Massachusetts judge barred Kalshi from offering sports markets in February. These legal challenges highlight the tension between state gambling laws and federal derivatives regulation.

CME Group has sued the Commodity Futures Trading Commission over its approval of Kalshi's cryptocurrency perpetual futures contracts, intensifying competition between the platforms. Despite two-thirds of bets losing money, investor appetite remains strong given the company's growth trajectory and Trump's public support for the industry. The outcome will test whether prediction markets can sustain their breakneck expansion amid regulatory scrutiny.