Prediction markets have been having a breakout moment. Kalshi has raised over $300 million at a valuation of $5 billion, following an announcement by its rival Polymarket that it had secured up to $2 billion in new backing from Intercontinental Exchange, the owner of the New York Stock Exchange, at a pre-money valuation of $8 billion. The twin milestones that the platforms have approached so far in 2025 indicate an accelerating race to determine how event-based markets enter the mainstream — and which firm or firms capture as much of the liquidity as possible once they do.
Kalshi’s Funding Round and Rapid Repricing
Kalshi is now worth about 2.5 times more than it was on its last raise three months ago, reflecting growing investor conviction in the company’s business plan. The most recent round was co-led by Sequoia Capital and Andreessen Horowitz, with the participation of Paradigm, CapitalG and Coinbase Ventures. The company also announced that people in 140 countries can now trade on its platform, a significant expansion following a period of product and regulatory back-end work.
- Kalshi’s Funding Round and Rapid Repricing
- Polymarket’s Institutional Endorsement From ICE
- Regulatory paths are converging for U.S. market access
- Why the valuations are shifting across prediction markets
- Market structure and competitive moats in event markets
- What This Means For Wall Street And Main Street
- The road ahead for prediction markets and regulation
Activity is rising sharply. Kalshi is on track for $50 billion in annualized trading volume, compared with roughly $300 million last year, according to The New York Times. That step-change in throughput brings prediction markets into orbit with other retail-forward derivatives niches, and gives Kalshi more fee revenue to recycle into market quality and compliance.
Polymarket’s Institutional Endorsement From ICE
The new investment in Polymarket from Intercontinental Exchange is a milestone for the industry. ICE manages crucial market plumbing in the world’s financial markets and its endorsement is a signal that event-linked contracts are inching closer to the financial establishment. Paired with ICE’s infrastructure know-how, the capital could allow Polymarket to scale listings, reduce spreads and build out risk controls that meet regulators’ and institutional players’ demands.
Regulatory paths are converging for U.S. market access
As they launched, the two competitors approached the U.S. market differently. Polymarket settled in 2022 with the Commodity Futures Trading Commission under an order that prohibited it from serving customers in the United States. In July, it acquired a derivatives exchange and clearinghouse, and the company has said it cleared regulatory hurdles set by the CFTC to re-enter the United States. Kalshi went through formal approvals — successfully challenging the CFTC in court to allow Americans to access its contracts. For both, they’ve begun to frame compliance as a competitive advantage rather than a burden.
Why the valuations are shifting across prediction markets
Several tailwinds are converging all at once: an election supercycle that always drives up trading interest, the advent of retail-friendly event contracts and increasing institutional willingness to hedge specific outcomes like inflation prints, monetary policy moves or legislation. Recap: University of Iowa prediction markets and other academic research have reliably shown that well-structured markets do a good job of aggregating information, making them desirable for traders and firms in search of clear odds and real-time risk indicators.
Below the horizon, economics are getting better. Greater volumes expand fee pools, lower slippage and lure more sophisticated market makers. That flywheel can help keep valuations afloat if user growth continues and regulators continue to provide clear pathways for products that operate above board.
Market structure and competitive moats in event markets
Prediction markets stand or fall on their breadth and depth. Breadth is the rhythm of fresh and impactful listings — think about CPI beats, rate decisions or big snap in oil price response. Depth is the capacity to trade size while maintaining reasonably tight spreads without significantly moving the market. Kalshi’s reported volume ramp indicates that it is building depth fast, while Polymarket’s ICE partnership could accelerate both in width and institutional-grade execution.
Regulatory posture is another moat. Exchange listings, clearing relationships and rigorous compliance systems make for barriers that are both costly and laborious to recreate. They also offer access to B2B revenue streams — data licensing, white-label hedging products and structured overlays for corporate risk managers — that go beyond retail trading.
What This Means For Wall Street And Main Street
For Wall Street, event markets represent a precision hedging tool in a world that is rife with macro shock moments. For retail investors, they offer a clear window into consensus expectations. If liquidity keeps growing, watch for even closer competition with mainstream exchanges that already offer event-based instruments and more sophisticated products linked to economic indicators and policy decisions.
The road ahead for prediction markets and regulation
But the next phase will determine who can transform headline growth into sustainable market share.
Keep an eye on the speed of U.S. product approvals, spreads and slippage relative to some of the most-watched retail markets, and how each platform handles its risk during periods of high volatility.
With a $5 billion valuation for Kalshi and an $8 billion pre-money valuation for Polymarket, the sector now holds expectations that are commensurate with its hype. Execution — on regulation, liquidity and product relevance — will determine whether those valuations are sustained.
