Kalshi, the CFTC-regulated prediction markets platform, is confronting a major regulatory setback in Washington state even as it negotiates a new funding round that could nearly double its valuation to $40 billion.
According to The Information, Kalshi is in talks with Sequoia Capital and Wellington Management to raise at least $750 million at the $40 billion valuation. Sequoia, an existing investor with a board seat and $56 billion in assets under management, may lead the round. Wellington Management, a Boston-based asset manager with $1.3 trillion in assets under management, would make its first investment in Kalshi. The company had previously raised $1 billion in May at a $22 billion valuation, and CEO Tarek Mansour said in June that an initial public offering could come in 2027.
The platform’s annualized revenue climbed to $4 billion in July, driven heavily by contracts tied to the 2026 World Cup. Kalshi says it controls about 95% of U.S. market share in its segment, with sports contracts accounting for more than 80% of total volume. It also announced the return of Jeff Bandman, the attorney who helped secure its CFTC-regulated exchange license in 2020, as CEO of Kalshi Prime, a unit focused on margined perpetual futures.
However, a Washington court has ordered Kalshi to stop offering event contracts tied to sports, elections, politics, entertainment, culture, technology, science, and mention-based events in the state. The company must implement IP- and residency-based geofencing by Aug. 19 and a multi-source geofencing system by Sept. 2. It is also barred from advertising restricted event contracts to Washington consumers. Contracts linked to commodities, climate, economics, and finance may remain available.
The ruling follows a preliminary injunction issued in July. Kalshi asked the Washington Court of Appeals to pause the order, but that request was denied. The dispute centers on whether federal derivatives law preempts state gambling rules. Washington Attorney General Nick Brown said the state would continue enforcing local law. Baltimore also filed a lawsuit against Kalshi and Polymarket on Thursday, accusing both prediction market operators of offering illegal gambling products.
