Kalshi Funding Round Targets $40B as Gen Z Keeps Betting

News of the Kalshi funding round broke in late September, when Reuters reported that the prediction market is in advanced talks to raise roughly one billion dollars at a valuation of about forty billion dollars, citing people familiar with the discussions, according to coverage of the report. Existing backer Sequoia Capital and Wellington Management are in talks to lead the round, with Tiger Global Management and Dragoneer Investment Group named as possible participants. The deal could close within weeks, though terms may still change, and Kalshi has not publicly confirmed the round.

If the Kalshi funding round closes at that price, it would nearly double the company's valuation in about five months. Kalshi announced a one-billion-dollar Series F financing in May at a twenty-two-billion-dollar valuation, led by Coatue, with Sequoia, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley and ARK Invest also taking part, according to reports on the announcement. That May figure was itself double the eleven-billion-dollar valuation Kalshi reached in December. At the time, Kalshi said institutional trading volume had grown eight hundred percent over six months, while annualized trading volume had more than tripled to one hundred seventy-eight billion dollars. "There are few categories in recent history that have scaled this quickly outside of AI," Kalshi co-founder and chief executive Tarek Mansour said in the May announcement.

The Gen Z trading boom behind the number

Prediction markets let users stake money on outcomes far beyond sports: elections, court decisions, celebrity headlines, even the weather. The Commodity Futures Trading Commission says event contracts traded on regulated prediction markets are typically structured as swaps and fall under its oversight, which is part of why Kalshi markets itself as a financial exchange rather than a sportsbook. That distinction matters to young users, because Kalshi opens its doors at eighteen while most states require sports bettors to be twenty-one, according to industry reporting.

Young traders are the engine of this growth. Northwestern Mutual's twenty twenty-six Planning and Progress Study found that thirty-two percent of Gen Z respondents are invested in or considering prediction markets or sports betting, and that eighty percent of Gen Z respondents interested in high-risk investments said they felt financially behind, according to reporting on the study. A Betterment retail investor survey released in August found that more than half of Gen Z investors had redirected funds otherwise intended for investing into sports betting over the past year. A Truist analyst noted that eighteen- to twenty-year-olds could be contributing significantly to Kalshi's growth, and sports now account for roughly eighty to ninety percent of the bets placed on the platform, according to the same coverage. Female users have climbed to twenty-six percent of Kalshi's base, up from thirteen percent ten months earlier, driven by influencer partnerships and new pop culture markets. Talks around the Kalshi funding round first surfaced in June, and that growing young user base is what investors are now trying to price.

Record volumes and a legal cloud

Earlier this month, Kalshi set a record for daily trading volume, with nearly four billion dollars in contracts trading in a single day, MarketBeat reported, which put the trailing thirty-day figure at nearly sixty-seven billion dollars. Industry-wide, prediction markets are expected to reach one trillion dollars in trading volume by twenty thirty, roughly twenty times the current level, according to the same report. That volume helps explain investor appetite for the Kalshi funding round.

The money is arriving alongside real legal risk, which is one reason the Kalshi funding round matters beyond the headline number. Kalshi is fighting more than thirty state-level actions over whether sports event contracts amount to illegal gambling, according to industry reporting, and a late-September ruling from the Sixth Circuit against the company deepened a split among federal courts on that question. Investors are evidently betting that the growth outweighs the uncertainty. The company has also held early talks about a future stock market listing that could arrive as early as twenty twenty-seven, according to reports, which would make the private round a stepping stone toward a public debut.

The losses behind the hype

The valuations tell one story, but user outcomes tell another. A BadCredit.org survey cited by TheStreet found that seventy-nine percent of prediction-market users lost money over the past year, with more than a quarter losing over five hundred dollars. Fifty-one percent said they used a credit card, personal loan or other borrowed money to place bets, and most of those borrowers lost too. Pew Research found global trading volume on the platforms more than quadrupled between September and April, jumping from five billion dollars to twenty-four billion dollars, according to TheStreet. The losses sit alongside the Kalshi funding round as a reminder that the platform's growth story and its users' outcomes are very different things. Kalshi's regulatory battles are escalating on a related front, as the CFTC moves on prediction market tactics, and the line between trading and betting keeps getting thinner: Gen Z already treats sports betting as an investing playbook.

Reuters' sources said the Kalshi funding round could close within weeks, though the terms may still change before anything is finalized. At forty billion dollars, investors would be paying nearly twice May's price for a platform whose busiest day now moves almost four billion dollars in contracts.