Prediction Markets Boom: Kalshi Raises $185M at $2B Valuation While Polymarket Eyes $200M Round

The prediction markets sector is experiencing a watershed moment as funding activity reaches nearly $400 million across two major platforms, signaling the industry's rapid transformation from experimental curiosity to mainstream financial infrastructure.

Kalshi announced the completion of a $185 million Series C funding round at a $2 billion valuation, led by crypto venture capital giant Paradigm. The round represents a significant milestone for the regulated prediction markets space, attracting participation from Sequoian, Multicoin, Neo, BOND Capital, and Citadel Securities CEO Peng Zhao.

Meanwhile, Polymarket is reportedly nearing closure of a $200 million funding round that values the world's largest prediction market at over $1 billion, according to sources familiar with the matter, The Information reported . Billionaire Peter Thiel's Founders Fund, an existing investor, is set to lead this round.

The timing of these substantial investments underscores growing institutional confidence in prediction markets as a legitimate asset class. Paradigm co-founder and managing partner Matt Huang drew parallels to cryptocurrency's early development, stating in a blog post by Kalshi that "Prediction markets remind me of crypto 15 years ago: a new asset class on a path to trillions."

For Kalshi, the funding comes more than three years after its previous round, during which CEO Tarek Mansour said the platform transformed from "a niche curiosity into one of the fastest-growing financial platforms in America." The company plans to use the capital to scale engineering infrastructure, integrate with additional brokerages, expand liquidity, and develop new market structures.

"Prediction markets are powerful. They can make the future more knowable, finance more honest, and authority figures more accountable," Tarek noted in the company's announcement. "But until Kalshi, they lacked infrastructure, trust, legality, and usability."

Polymarket, founded in 2020 by CEO Shayne Coplan, has taken a different approach by focusing on cryptocurrency-based trading for international users. The platform gained significant attention during the 2024 U.S. presidential election when contracts predicting a Republican sweep surged, even as traditional polls and media outlets favored Democratic candidate Kamala Harris.

The divergent regulatory approaches highlight the sector's complexity. While Kalshi operates under U.S. regulatory approval, Polymarket currently restricts American users from trading in compliance with Commodity Futures Trading Commission guidance.

Both platforms operate on the principle that traders with financial stakes in outcomes can collectively generate more accurate forecasts than traditional polling or expert analysis. Current markets span diverse topics from political outcomes and economic indicators to geopolitical events, with questions ranging from recession probabilities to international tensions.

The substantial valuations reflect the platforms' rapid growth and the market's potential scale. Kalshi's $2 billion valuation represents notable confidence in regulated prediction markets, while Polymarket's billion-dollar-plus valuation underscores the global appetite for event-driven trading.

Notably, Paradigm's investment in Kalshi marks only their third venture outside cryptocurrency, alongside previous investments in Stripe and Citadel. This selective approach emphasizes the venture firm's conviction in prediction markets' transformative potential.

The industry's evolution from what many considered fringe betting to sophisticated financial instruments represents a broader shift in how markets process information and price uncertainty. As traditional forecasting methods face scrutiny for their limitations, prediction markets offer an alternative mechanism that harnesses collective intelligence through financial incentives.

Looking ahead, both platforms are positioned for significant expansion. Kalshi aims to make prediction markets "as commonplace as trading on stocks," while Polymarket continues establishing itself as the premier international platform for event-based trading.