Kalshi Seeks Funding at $40 Billion Valuation, with Sequoia and Wellington in Talks to Lead

Prediction market leader Kalshi has nearly doubled its valuation within three months and is negotiating a new round of funding with Sequoia Capital and Wellington Management.

According to a report by The Information on August 12, Kalshi is in deep negotiations for a new funding round, targeting a raise of at least $750 million at a $40 billion valuation. Sequoia Capital and Wellington Management are in talks to co-lead the investment. Insiders stated that the funding size has not been finalized and remains subject to change. Spokespersons for Kalshi, Sequoia, and Wellington declined to comment.

This valuation is nearly double that of Kalshi's previous funding round completed in May this year, when the company raised $1 billion at a $22 billion valuation. The valuation leap in just three months reflects strong market enthusiasm for the prediction market sector.

Revenue Surge, World Cup as Catalyst

The rapid rise in Kalshi's valuation is underpinned by a sharp expansion in revenue.

Kalshi's annualized revenue exceeded $4 billion in July, doubling from approximately two months prior, with World Cup-related betting contracts serving as the primary driver.

Currently, sports contracts account for more than 80% of Kalshi's trading volume. This structure implies that Kalshi's revenue is highly dependent on event cycles, with traffic from major events like the World Cup exhibiting distinct phased characteristics.

Meanwhile, the company faces pressure from high marketing expenditures and may be subject to new state-level taxes.

Investor Background: Existing Shareholders Increase Stakes, New Faces Enter

Sequoia Capital is an existing shareholder of Kalshi, with partner Alfred Lin serving on Kalshi's board of directors. A successful lead investment would further consolidate Sequoia's bet on this sector.

Wellington Management is a potential new investor. The asset management giant has a precedent of making private investments before corporate IPOs—such "Pre-IPO" positions typically indicate that investors hold an optimistic view of the company's listing prospects.

According to a June report by The Information, Kalshi has held informal discussions with several banks regarding a potential IPO as early as next year. Wellington's entry aligns closely with this timeline.

Regulatory Cloud: The Struggle Between Federal Licenses and State Lawsuits

Kalshi's rapid growth is not without risks.

The company is currently engaged in legal disputes with regulators in multiple states, who accuse Kalshi of operating illegal gambling businesses. Kalshi's stance is clear: "The company is regulated by the Commodity Futures Trading Commission (CFTC), and state regulators do not have the authority to shut down an exchange holding a federal license."

Kalshi obtained its exchange license from the CFTC in 2020. Jeff Bandman, the lawyer who assisted in securing this application, announced his return to the company this week as CEO of Kalshi Prime. Kalshi Prime handles customer service for the company's margin perpetual futures business.

This jurisdictional dispute between federal and state regulation will be a key threshold Kalshi must cross before moving toward an IPO.