Boom! Valuation skyrocketed by 400% in less than a year, with Kalshi raising $1 billion, but with regulatory sword hanging overhead, can retail investors still get on board?

Let’s talk about a thing today—Prediction Market Kalshi has just completed a $1 billion funding round, with its valuation soaring to $22 billion.

In less than a year, the valuation jumped from $5 billion to $22 billion, a 400% increase. This speed, apart from the AI sector, is almost unmatched. Founder Tarek Mansour also said that in recent years, there are only a few sectors that can grow this fast.

The lead investor is Coatue, Philippe Laffont’s fund, with Sequoia, a16z, and Morgan Stanley also participating. With a valuation of $22 billion, it has surpassed the $17 billion market cap of FanDuel’s parent company Flutter, the world’s largest publicly traded gambling group, and is nearly twice that of DraftKings.

Where is the money flowing? Mainly in two directions: one is the newly launched block trade feature, and the other is the “upcoming risk products.” In simple terms, it’s targeting the wallets of financial institutions.

Looking at trading volume: last April, the annualized volume was $5.5 billion; this April, it reached $178 billion. A 30-fold increase. Revenue mainly comes from sports betting, with sports contracts and multi-leg parlay “exotic” contracts accounting for 85% of last month’s trading volume.

But Kalshi’s strategic focus is shifting. Analyst Gautam Chhugani predicts that by 2030, prediction market trading volume could exceed $1 trillion. He says sports contracts are just the entry point, not the end goal.

The problem is, regulation is a tough hurdle. Multiple state gambling regulators have sued it, claiming it is an illegal sports betting platform. Kalshi insists it is a derivatives exchange regulated by the CFTC. Recently, a federal judge issued an injunction, temporarily blocking criminal charges from Arizona Attorney General Kris Mayes, giving Kalshi some breathing room.

But the regulatory sword of Damocles still hangs overhead. Whether the rapid growth can turn into a sustainable business depends entirely on when this sword will fall.

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