Prediction market Kalshi is reportedly in early, informal talks with investment banks about an initial public offering (IPO), despite increasing regulatory scrutiny over sports betting contracts on these platforms.
Kalshi is in early-stage talks to go public via an IPO after the platform surpassed $2 billion in annualized revenue, unidentified sources familiar with the matter told The Information, according to a Friday report.
A spokesperson for Kalshi declined to comment on the matter.
The reported IPO discussions come as sports betting contracts account for more than half of Kalshi’s weekly notional trading volume, even as those markets face mounting legal challenges from US states.
Sports betting contracts were the leading category on Kalshi, representing about 53% of its weekly notional trading volume, according to Dune data. Sport-related betting was also the leading category on Polymarket, accounting for about 69% of its weekly trading volume.
Kalshi doubled its valuation to reach $22 billion after closing a $1 billion Series F funding round led by Coatue Management, Cointelegraph reported on May 7.
Kalshi weekly notional volume by category. Source: Dune
US regulators are cracking down on sports-related prediction market contracts
Kentucky became the latest state to sue five prediction markets, including Kalshi and Polymarket, accusing them of “operating unlicensed and illegal sports betting and gambling platforms,” Cointelegraph reported on Thursday.
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At least 17 other states have taken prediction market operators to court, attracting the involvement of the US Commodity Futures Trading Commission (CFTC).
State authorities argue that sports event contracts require state-level licenses, while prediction markets claim their event contracts are swaps regulated under federal commodities law.
The CFTC also argued that event contracts qualify as “swaps” as they are based on binary events. On May 14, the CFTC issued a no-action letter seeking to ease event contract reporting rules.
CFTC no-action letter on prediction markets. Source: CFTC.gov
The CFTC has sued at least five states in a bid to cement its authority over prediction markets, including Wisconsin, New York, Arizona, Connecticut and Illinois.
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