Prediction market platforms Kalshi and Polymarket are locked in a fierce competition for investor capital, driving up valuations amid a surge in regulatory clarity for the emerging financial sector. Investors are concentrating massive capital into these two companies, forming what market observers describe as a duopoly.
Kalshi recently completed a new funding round, raising $1 billion and boosting its valuation to $11 billion. This significant investment was led by Sequoia and CapitalG. The company had previously secured $300 million in October, which valued it at $5 billion.
In parallel, its fast-growing rival, Polymarket, is actively seeking new financing. Industry sources indicate Polymarket aims for a valuation between $12 billion and $15 billion.
The aggressive fundraising and rising valuations reflect intense investor enthusiasm for prediction markets. These platforms allow users to trade on real-world events, from election outcomes to economic decisions.
Market data shows Kalshi holding approximately 60% of the market share by volume. Polymarket accounts for the remaining 40%. Polymarket’s transaction metrics are verifiable on-chain, offering enhanced transparency.
Open interest, a key indicator of market activity, is also soaring for both platforms. Kalshi reports $320 million in open interest, while Polymarket stands at $300 million. These figures are nearing the peak levels observed during the U.S. election cycle last year.
November is poised to set new historical volume records for both companies, further bolstering private investor confidence in this specialized financial category.
A critical factor fueling this investment wave is a clearer regulatory environment. Kalshi operates as an exchange regulated by the U.S. Commodity Futures Trading Commission (CFTC), reinforcing the legitimacy of prediction markets as a financial tool.
Further regulatory progress occurred this week when the CFTC issued an amended order, officially permitting Polymarket to re-enter the U.S. market. Polymarket had faced restrictions in 2022 due to allegations of operating as an unregistered derivatives exchange.
With both companies strengthening their legal standing, a significant barrier to the broader adoption of prediction markets as legitimate financial instruments has been reduced. Future growth could accelerate with expanding user participation and the potential for a native token and airdrop from Polymarket, which could generate additional speculative interest.