Kalshi targets $40 billion valuation as World Cup betting doubles revenue

Kalshi's annualized revenue doubled to $4 billion in July on World Cup betting, and the prediction market platform now seeks a $40 billion valuation — nearly double its May round and above Coinbase's market cap.

"The bigger story is consolidation, not the IPO race," Bernstein analysts wrote in a June note. "Every consumer platform that matters in this category has spent the past year merging the front end with the back end."

Kalshi's revenue jumped from roughly $2 billion annualized in May to more than $4 billion by July, according to people familiar with the matter. The surge came as the company secured a World Cup sponsorship, ran ads featuring actor Timothée Chalamet and soccer star Lionel Messi, and captured a wave of sports betting volume. Monthly trading volume reached $37.7 billion in July, according to industry data. But growth came at a cost: June operating expenses hit $300 million, mostly marketing, putting annualized spending near $3.6 billion against roughly $4 billion in revenue.

The valuation push puts Kalshi ahead of Polymarket, which is in talks to raise $1 billion at a $20 billion valuation, and sets up a high-stakes race for dominance in a prediction market sector that handled more than $50 billion in volume during the World Cup's opening weeks alone. But regulatory headwinds — including a New York lawsuit alleging illegal gambling and new state tax regimes — could complicate the path to an IPO that Kalshi has told investors it is exploring as early as next year.

Revenue Surge Meets a $300 Million Monthly Burn

Kalshi's revenue model relies on transaction fees from trading activity. Sports betting accounts for more than 80 percent of volume, and the World Cup sponsorship — secured mid-tournament — drove a wave of new users. The company's annualized revenue trajectory, from $2 billion in May to $4 billion in July, reflects the scale of that influx.

The cost side is steeper. June operating expenses of $300 million, driven primarily by marketing, leave thin margins even at the higher revenue run rate. The company's aggressive ad spend — featuring Chalamet and Messi across stadiums, television, and digital platforms — reflects a land-grab strategy as competitors enter the space.

Robinhood has already shifted a portion of its prediction market orders away from Kalshi to Rothera, its joint venture exchange with Susquehanna International Group. Robinhood orders accounted for just 17.5 percent of Kalshi's volume in the second quarter, down from nearly 50 percent a year earlier, according to Artemis data.

Regulatory and Competitive Pressures Mount

Kalshi faces multiple state-level legal challenges. New York sued the company last month, alleging it operates an unlicensed gambling business and seeking to halt operations in the state. Kalshi has argued that its CFTC license preempts state authority, and the CFTC has backed the company, invoking emergency powers to keep it operating.

North Carolina enacted a 6 percent tax on prediction market net fee income last month, while Kentucky passed similar legislation. A coalition including Kalshi and Polymarket has sued to block the Kentucky law. Before the New York lawsuit, Kalshi had offered to pay taxes to the state, projecting billions in revenue over five years. FlightAware, a flight tracking data company, sued Kalshi this week over alleged unauthorized use of its data for flight delay contracts.

The competitive field is shifting rapidly. DraftKings bought exchange Railbird last October and launched its own DKeX platform in June. Robinhood built Rothera with Susquehanna. Coinbase acquired The Clearing Company after launching its own event contracts. Flutter, FanDuel's parent, set up a dual-broker arrangement.

Bernstein's thesis is that Kalshi and Polymarket — both owning regulated exchange infrastructure but lacking consumer distribution — are as likely to be acquisition targets as acquirers. The pattern echoes crypto exchanges: Coinbase bought Deribit for $2.9 billion last year, and Kraken acquired NinjaTrader for $1.5 billion.

Polymarket, meanwhile, is expanding its U.S. presence after acquiring CFTC-licensed exchange QCEX for $112 million in July 2025. Its U.S. trading volume grew from $1.8 billion in May to roughly $5 billion in July, though that remains far below Kalshi's $37.7 billion monthly volume.

If Kalshi completes the round at $40 billion, its private valuation would exceed Coinbase's market cap and approach Robinhood's roughly $85 billion. But the company's thin margins — $3.6 billion annualized expenses against $4 billion revenue — and unresolved regulatory battles in multiple states leave significant downside risk. The prediction market sector's rapid consolidation suggests that whether Kalshi goes public, gets acquired, or faces a regulatory setback, the next 12 months will determine its trajectory.

This article is for informational purposes only and does not constitute investment advice.