Kalshi

IWhat it does

Kalshi is a US exchange where people trade contracts on whether something happens. A contract pays $1 if the event happens and $0 if it does not. If a contract trades at 62 cents, the market is saying there is roughly a 62% chance. The events cover sports, politics, economic data, crypto prices, commodities and weather. Kalshi mostly matches buyers and sellers and charges a fee, though it also runs an in-house market-making arm¹⁴.

Kalshi is regulated by the CFTC (the Commodity Futures Trading Commission, the federal derivatives regulator) as a designated contract market. That status is the core of the business and also the core of its legal fight. Kalshi says its contracts are federally regulated swaps, so only the CFTC can police them. Several states say the sports contracts are plain gambling and need a state licence⁸.

This page covers a company that is not publicly traded. Kalshi has no listing, no ticker and no filed prospectus that I could find. Its own numbers come from press releases and anonymous-source reporting, not audited accounts. I could not find any audited or filed financial statements.

The company has widened what it calls itself. In its October announcement it describes the goal as building the next-generation financial exchange. Kalshi launched perpetual futures in late May, its first product that is not a prediction market². A perpetual future is a contract that tracks a price with no expiry date. The company also lists new products it plans to add: indices, single-stock perpetual futures and markets on the price of computing power¹.

Some scale figures, all company-reported. Kalshi says it has over 30 million accounts, and about 500 institutional entities were active in September¹. Annualised trading volume was $178 billion in the May announcement, up from $52 billion six months before⁴. By October the company said annualised volume exceeded $1 trillion¹. Those two figures are hard to square with third-party tallies, which I cover below under the numbers.

IIHow it makes money

Kalshi earns mainly from trading fees. The taker fee (charged to the side that takes an existing order) is, per contract, 7% times the price times one minus the price, rounded up to the next cent. At a 50 cent price that is about 1.75 cents on a $1 contract. Some markets also charge makers about a quarter of that¹⁴. Fees are highest near 50-50 outcomes and shrink towards zero near certainty.

Kalshi also earns interest on customer cash held at clearing banks. It pays users up to 4.05% on idle cash and keeps part of the spread, but the net amount is not disclosed¹⁴. Deposits by debit card carry a 2% processing fee¹⁴. These are minor next to trading fees on the evidence I have.

The best-documented year is 2025. One analysis puts 2025 fee revenue at $263.5 million on $22.88 billion of volume, a take rate of just under 1.2%, with sports contracts about 89% of fees¹⁴. That is an outside estimate, not a company figure. Sacra, a research firm, estimates a blended take rate of about 1.2% in 2026 against about 0.67% for Polymarket¹³.

Growth in 2026 was steep. Kalshi said in May that annualised revenue exceeded $1.5 billion³. The Information reported that World Cup trading lifted the pace above $4 billion a year in July, double the rate two months earlier¹⁵¹⁶. Sacra independently estimated $3.5 billion annualised in June¹³. These are annualised figures: a hot month multiplied by twelve. The World Cup ended in July, so the July pace is likely a peak, not a steady state. That is my reading, not a reported fact.

In October the company gave a different figure: non-sports markets alone run at over $1 billion annualised, per the company via the Wall Street Journal³. It also said commodities generated over $100 million of annualised fees in three months, and international retail is approaching $100 million of annualised fees about a year after launch in more than 140 countries¹. It did not give total revenue.

My fee estimate is a cross-check, not a forecast. Sacra’s June figure of $3.5 billion annualised is $292 million a month. Against roughly $30 billion of June volume in the same Sacra note, that is about 1%¹³. This is consistent with a take rate near 1.2% on fee-paying volume, because some June volume was zero-fee perpetual futures¹³. Utah’s own estimate of Kalshi fees from Utah accounts is $30.5 million to $61.1 million, on a stated share of 1.1% of wagers¹¹. Dividing by 1.1% implies national fees of roughly $2.8 billion to $5.6 billion, a wide range that brackets the press figures. This is my arithmetic on a state’s litigation estimate, so treat it as loose.

Revenue and fee evidence, by type of source

IIIThe market and the competition

Kalshi says it holds over 75% of prediction-market trading volume¹. In May it said over 90% of US activity⁴. A Sequoia comment cited by The Information said 95% of the US market¹⁶. The numbers differ because of the measure used and the date, and all are company or investor claims. One third-party tracker showed Kalshi at 92.9% of combined volume with Polymarket’s global exchange in a September week¹².

Polymarket is the main rival. It is reportedly in talks to raise about $1 billion at a valuation above $20 billion, after a $15 billion round in April, per press reports¹⁵¹⁹. The Information put Polymarket’s annualised revenue at $1.1 billion for the same period as Kalshi’s $4 billion¹⁶. These are anonymous-source figures.

Distribution partners are also competitors. Robinhood routes event contracts to Kalshi and has built its own exchange, Rothera, a joint venture with Susquehanna that reached over $100 million in annualised revenue in its first full quarter¹⁷. Robinhood made up 17.5% of Kalshi’s second-quarter volume, down from nearly half a year earlier, per The Information¹⁵. Sacra says Robinhood has begun routing some World Cup contracts away from Kalshi¹³. Robinhood’s own event-contract revenue was $173 million in the third quarter, from a record 16.4 billion contracts¹⁷.

Coinbase reportedly reached about $100 million of annualised prediction-market revenue within two months of launching event contracts¹⁹. Sportsbooks such as DraftKings and Flutter are moving in as well. DraftKings and Flutter had market values of about $12.5 billion and $17 billion in June, per Bernstein¹⁹, well under Kalshi’s $40 billion.

The traditional sportsbooks are also the state-licensed alternative. They pay state gambling taxes and use age limits of 21 in most places, while Kalshi reportedly lets users start at 18⁹. That cost gap is the reason states push back, and it is also Kalshi’s cost edge if it holds.

IVThe moat and how it could be disrupted

Kalshi’s advantages are real but each has a weak spot. The first is liquidity: more buyers and sellers mean tighter prices, which attract more traders. That is a network effect, but it is shallow. Trading firms such as Susquehanna, named as Kalshi market makers in the Utah suit¹¹, and Hudson River Trading, an investor in this round¹, are tied to its liquidity. Market makers can move to a rival exchange if the economics are better. Rothera is an example of a large distributor and a market maker building their own venue¹⁷.

The second is regulation. Kalshi holds a CFTC licence and has spent years in court defending it. A licence is hard to copy quickly. But the same licence has not stopped states, and Robinhood’s Rothera now has its own federally regulated exchange¹⁷.

The third is distribution and brand. Over 30 million accounts and a long partner list, including Interactive Brokers, Stripe, PayPal and Nasdaq, give reach¹. But marketing is costly: June operating expenses were reported at $300 million, mostly marketing¹⁵. Spend that high suggests customers can be bought, not that they are locked in.

Switching costs for a retail trader are low. Money moves in and out by bank transfer or card, and a trader can hold accounts on several venues. For institutions, integration and clearing relationships add some stickiness, and the company says institutions were 25% of volume excluding market makers¹.

What most likely breaks the moat is the legal result. If the Supreme Court sides with states, Kalshi’s sports business, the dominant source of fees, could be limited to states that allow it. If it sides with Kalshi, rivals with the same CFTC licence can copy the product, and fees may fall as competition grows. I rate the moat contestable: the advantages are real now, but a challenger with a licence, a customer base and a market maker already exists.

VState-level legal fights

Kalshi’s main legal risk is a single question: are its sports contracts federally regulated swaps or state-regulated gambling? Appeals courts have split. The Third Circuit sided with Kalshi in April, the Ninth Circuit and Sixth Circuit sided with states in August and September⁸. CoinDesk also mentions an Eighth Circuit ruling that sports contracts are not swaps, which I could not confirm elsewhere⁹. New Jersey has asked the Supreme Court to decide²⁰. The Court takes roughly 2% of petitions, and the article gives no date for its decision on whether to hear the case²⁰. CNBC says a Supreme Court case is likely to resolve the dispute².

Utah is the sharpest example. A federal judge ruled Utah can enforce its anti-gambling laws, and the state says offering online gambling there is a third-degree felony⁷. On 20 October Utah filed a state-court suit against Kalshi and two Susquehanna firms, seeking to stop Kalshi operating in Utah and to recover profit. It estimates Kalshi collected $30.5 million to $61.1 million in fees from Utah accounts, and that at least 32,000 Utahns had verified accounts by February¹¹. These are the state’s estimates, not court findings.

The criminal case is new and escalates the risk to people, not only to the company. The charges name Kalshi and co-founders Tarek Mansour and Luana Lopes Lara¹⁰. Reports disagree on the filing date (20 or 28 October)¹⁰. Kalshi calls them a crazy overreach and says its contracts are federally regulated swaps¹⁰. Charges are allegations. Nothing has been decided.

The federal government is on Kalshi’s side. The CFTC has sued Utah and says it has started proceedings against nine other states and filed briefs in four federal appeals courts⁶. That support could change if the CFTC’s leadership or policy changes, which I cannot predict.

I did not open reporting on every state. Press accounts I saw but did not verify include a Massachusetts court order barring Kalshi sports contracts there and Kentucky’s tax on prediction-market fees. Treat the table as the main cases only, not a full list. A tally of every state would need the court dockets.

Main court and enforcement events (as reported to 1 Nov 2026)

VIThe numbers we can see

Volume is where the numbers disagree most, and the reason is that ’volume’ means different things. A contract that pays $1 is counted at $1 of face value by some trackers, but the cash that changes hands is the price paid, often 30 to 70 cents. One tracker showed $15.27 billion of displayed contract volume in the week of 14 to 20 September, but only $3.53 billion at execution prices, across 85.26 million trades¹². Kalshi had its first $3 billion day on 20 September on the displayed measure¹².

The company’s own $1 trillion annualised figure¹ sits on yet another basis. It includes perpetual futures, which Kalshi says traded $83 billion since launch¹, and probably institutional and crypto volume. DefiLlama showed roughly $15.8 billion over 30 days³. I cannot reconcile these from public data. For a fee business what matters is fee-paying volume, and Kalshi does not publish it.

Sports are the earner. About 21% of one September week’s displayed volume was sports¹², but press reports say sports are over 80% of volume¹⁶ and about 89% of 2025 fees¹⁴. A likely reason is that perpetual futures and crypto contracts inflate the face-value total but pay little or no fee: Sacra says perpetual futures in June charged zero fees¹³. This is my reading of the figures, not something the sources state outright.

Kalshi’s spending is heavy. June operating expenses were reported at $300 million, or $3.6 billion a year if sustained¹⁵. Against $3.5 billion to $4 billion of annualised revenue, that puts the company near break-even at the peak of the World Cup. No source gives profit or margin. I cannot tell whether Kalshi makes money after tax.

Funding: Series G brought in $1 billion at $40 billion post-money¹. Earlier rounds: $11 billion in December 2025⁵, $22 billion in May 2026⁴. I did not find a primary total for money raised to date.

Volume figures that cannot all be right on the same basis

VIIWho runs it and who owns it

Tarek Mansour is chief executive and Luana Lopes Lara is chief operating officer. Both co-founded the company and both are named in the Utah criminal charges¹⁰. I did not find reliable figures for headcount or founder ownership, and I cannot say how much of the company the founders hold.

Investors are a mix of venture funds, crossover funds and trading firms. Series G was co-led by Wellington Management and Sequoia Capital, with Baillie Gifford, Stripes, Andreessen Horowitz, Coatue, Layer Global, Morgan Stanley Investment Management, Sequoia Global Equities, CapitalG, Hudson River Trading and Balyasny Asset Management¹. Series F was led by Coatue⁴. Series E was led by Paradigm⁵. CNBC puts the October 2025 valuation at $5 billion, so the price has risen eightfold in about a year².

CNBC discloses a commercial relationship with Kalshi, including a minority investment². I note it because CNBC is one of my sources.

Two things I cannot judge: how the board and the founders balance a growth push against legal risk, and how the preferred shares are structured. A late-stage round of this size often carries liquidation preferences, which can matter a lot to what common holders could receive in a downturn. That is general knowledge, not something the sources say about Kalshi.

VIIIValuation: is the last price supported?

Equity value in US$ billions. Not a share price: a private company has none. Latest mark: primary round, post-money (Series G).

What the last valuation assumes

At $40 billion, my model needs 2030 net fee revenue of about $8.7 billion to $12.6 billion, depending on whether it earns a 20x to 25x multiple on a 30% to 35% net margin. That is about four to six times my 2026 estimate of $2.2 billion, with the sports business still legal in most of the country. The price is also about 10x the World Cup peak run-rate, which is not a normal year.

Bear, base and bull

• Bear. Sports contracts are restricted in many states after Supreme Court or circuit losses. 2030 revenue $1.5 billion, net margin 15%, 15x earnings, 15% discount rate for four years, 10% dilution, plus $1 billion of fresh Series G cash¹. Result about $2.7 billion, shown as 3.
• Base. 2026 revenue about $2.2 billion on my estimate, below the July peak¹⁵. Fees grow to $5 billion in 2030 from non-sports, institutions, international and a partial sports position. Net margin 30% after marketing normalises, 25x earnings, 15% discount rate, 10% dilution, plus $1 billion cash. Result about $20.3 billion, shown as 20.
• Bull. Federal preemption wins and Kalshi holds share. 2030 revenue $12 billion, net margin 38%, 28x earnings, 15% discount rate, 12% dilution, plus $1 billion cash. Result about $65 billion.

Comparables used

Where I come down

The latest valuation is above my base value of about $20 billion, roughly twice it, and between my base and bull cases. To justify $40 billion you would have to believe three things together: courts or Congress let sports contracts run nationally, Kalshi keeps most of the market against Polymarket, Rothera and others, and margins reach 30% or better once marketing settles. The market may be right even if this looks high. Kalshi grew from about $0.65 billion of run-rate in late 2025 to above $4 billion in mid-2026¹⁴¹⁵, the investors include large crossover and institutional funds¹, and the company says its non-sports business already runs at over $1 billion¹. Listed trading platforms have been given high multiples, with Robinhood at about 45x annualised earnings on my arithmetic¹⁸. My base case uses 25x. If Kalshi earned a Robinhood-like multiple, the base value would be near $36 billion. I treat my number as one view with a wide range, not a forecast.

What I cannot judge

Public data is thin. There are no audited accounts, no profit figure, no fee-paying volume and no share count. Revenue figures are annualised, from different sources, and the July figure was a peak. I cannot tell whether Kalshi is profitable, how much cash it holds, or what liquidation preferences exist. I did not verify the status of every state case or the outcome of the New Jersey petition. A single legal ruling could move the value by more than any model input.

IXThe IPO

Reported to be preparing an IPO. CEO Tarek Mansour said in June that Kalshi was considering going public but not before 2027². The Information reported informal talks with investment banks¹⁵. No exchange, ticker, banks or size are public, and I found no filing. Press has called Series G the last private round before an IPO, but Mansour declined to confirm timing, per a New York Times report I saw only in a search summary.

What to watch

• A confidential or public filing with the SEC
• The Supreme Court’s decision on New Jersey’s petition²⁰
• Resolution of the Utah civil and criminal cases¹⁰¹¹
• Audited financials or profit disclosure
• Third-party volume tracked on a fee-paying basis, not face value¹²
• Whether Robinhood and other distributors keep routing volume to Kalshi¹⁷

XWhat could go wrong

Legal loss. If the Supreme Court or more circuits rule that sports contracts are state-regulated gambling, Kalshi may have to get state licences or exit states. Licences bring taxes, age limits and caps on promotions. Sports are the bulk of fees¹⁴¹⁶. A ruling against it is the most likely way the business is destroyed or cut sharply.

Personal and criminal exposure. The Utah charges name the founders¹⁰. A conviction is far from certain, but even the charges can stop banks, payment partners and licensing authorities from working with the company. Other states could copy the approach.

Concentration and seasonality. The July peak was set by a once-in-four-years tournament¹⁵. Fee revenue follows sports calendars and election cycles. Midterm elections ahead are a tailwind that then ends. I model a lower base year than the peak for this reason.

Competition on fees. Robinhood’s Rothera and Polymarket are rivals¹⁷¹⁵. If distribution partners keep moving volume to their own venues, Kalshi loses both volume and its main source of retail traffic. Robinhood’s share of Kalshi volume already fell from nearly half to 17.5%¹⁵.

Cost. Marketing was most of $300 million in monthly operating costs in June¹⁵. If growth slows, that spend becomes the swing factor between profit and loss.

Credibility of the metrics. The $1 trillion annualised volume and 75% share are company claims on bases that do not match third-party trackers¹¹². A buyer relying on them could be misled.

What has to go right together. For a $40 billion price to hold up by my numbers, several things must hold at once. My illustrative odds, which are judgement and not data: sports stay broadly available nationwide, 35%; Kalshi keeps a leading share against rivals with their own venues, 60%; margins reach 30% or more as marketing normalises, 60%; no punitive tax or enforcement shock, 70%. Multiplied, that is about 9%. These inputs overlap, so the true figure is not a simple product, but it shows how much has to line up.

The next best alternative for the same dollar. A listed rival with the same exposure and public accounts, such as Robinhood, trades on reported earnings and has a price anyone can check¹⁸. Private Kalshi stock offers no such disclosure. This is a comparison of information quality, not a recommendation.