Kalshi vs Polymarket: how prediction markets scaled
Kalshi went from a $2 billion to a $40 billion valuation in 16 months; Polymarket took ICE money and reportedly bought its way back into the US. Both now face state lawsuits.
Kalshi raised $1 billion at a $40 billion valuation on October 29, 2026, up from a $2 billion valuation in June 2025. Polymarket took $1.6 billion from NYSE owner ICE and returned to the US through a CFTC-licensed exchange it reportedly bought. Both prediction markets scaled while New York and other states sued them.
Results at a glance
| Metric | Value | Note |
|---|---|---|
| Kalshi valuation | $40B post-money ($1B Series G, Oct 29, 2026) | Company release; $2B in June 2025, $22B in May 2026 |
| ICE investment in Polymarket | $1B (Oct 2025) + $600M (Mar 2026) | ICE releases; first deal priced Polymarket at about $8B before the money |
| Polymarket valuation (reported talks, Apr 2026) | $400M raise at $15B | Reported by Bloomberg, not independently verified; not a closed round |
| Kalshi scale | 30M+ accounts created, annualized volume above $1T | Company figures, Oct 2026, not independently verified; up from $178B annualized in May 2026 |
| Polymarket volume | About $10.3B notional in April 2026 | Offshore exchange plus US app; reported by Bloomberg, not independently verified |
| Legal exposure | New York sued Kalshi (Jul 31, 2026) and Polymarket (Sep 24, 2026) | State AG releases; more states listed below |
Context
A prediction market lists yes/no contracts on future events, priced between $0 and $1. Our explainer covers how prediction markets work and how they differ from sports betting, so this case sticks to the business.
The two companies started from opposite ends. Kalshi, whose co-founder Tarek Mansour is also its CEO, asked permission first. The CFTC designated KalshiEX LLC as a designated contract market (DCM) in November 2020, on a direct-to-customer model only.
Polymarket, founded by Shayne Coplan, launched as a crypto-based market with no US registration. In January 2022 the CFTC fined its operator, Blockratize, $1.4 million for offering event-based binary options without registering and ordered it to wind down those markets. Polymarket then ran largely offshore until its US launch in late 2025.
Politics was the first fight. Kalshi sued the CFTC over its block on congressional-control contracts and won in federal district court in Washington, D.C., in September 2024. The CFTC dropped its appeal in May 2025.
Both companies are private, so neither has a stock to buy.
What they did: Kalshi vs Polymarket, two routes to scale
Kalshi: the licence as the product
The company treated its federal status as something to sell. In January 2025 the CFTC granted its request to permit intermediated trading, which opened the way for brokers to offer its contracts. The October 2026 funding release lists Interactive Brokers, Marex, Clear Street, Cantor Fitzgerald, Public.com, Plus500, Wealthsimple and Alpaca among its partners, alongside S&P, Nasdaq, Stripe, PayPal and Block. With S&P it said it will build indices on prediction markets.
It then added sports event contracts, the product most state suits now target. Politics, the category it fought the CFTC over, became a small slice: just over $8 billion of annualized volume, by the company's own figures.
Money came in short steps: $185 million at $2 billion, then $300 million at $5 billion, $1 billion at $11 billion, $1 billion at $22 billion in May 2026, and $1 billion at $40 billion in October.
Polymarket: buying a way back in
In July 2025 Polymarket acquired QCEX, a CFTC-licensed exchange and clearinghouse, for about $112 million, as reported by Bloomberg. The unit became QCX LLC, doing business as Polymarket US, the entity New York later named in its suit. A November 2025 amended CFTC order reportedly let it serve customers through brokers. The US app reportedly opened to a waitlist in December 2025, starting with sports, and was reported as broadly available by May 2026.
ICE added money and distribution. Its October 2025 deal came with a plan to sell Polymarket's market data to institutional clients and to work together on tokenization.
Results
Kalshi's valuation rose 20-fold in 16 months, across five priced rounds. In its May 2026 release the company said annualized volume had grown from $52 billion to $178 billion in six months. In October it reported annualized volume above $1 trillion, more than 30 million accounts created and over 75% of prediction-market volume. These are company figures, not independently verified.
The October release also put non-sports annualized revenue above $1 billion. About 500 institutional entities traded in September, and those other than market makers made up about 25% of volume.
Polymarket's numbers come mostly from outside. ICE's two direct investments total $1.6 billion. Bloomberg reported monthly notional volume of about $10.3 billion in April 2026, down roughly 9% from a March record. It combines the offshore exchange and the US app.
The legal results split. Kalshi won the right to list election contracts at federal level. On sports contracts, courts in different circuits have ruled both ways. Polymarket settled with the CFTC, then got a US licence, reportedly by acquisition (Bloomberg), instead of a new application.
What did not work
The core dispute is whether these contracts are gambling. Several states say yes. Kalshi and the CFTC say its contracts are federally regulated swaps.
New York. On July 7, 2026, a federal judge in Manhattan refused Kalshi preliminary relief. The court found that New York's gambling laws, as applied to its sports-event contracts, are not preempted by the Commodity Exchange Act. On July 31 the attorney general sued Kalshi. The suit calls the platform unlicensed gambling, notes that it accepts 18- to 20-year-olds, while New York sets 21 as the minimum age for mobile sports betting, and asks for a shutdown, restitution and fines of three times its gains. A news report put the exposure far higher; the attorney general's release gives no figure. The company's position, as reported, is that a state cannot shut down an exchange the federal government licenses. New York sued Polymarket on similar grounds on September 24.
Federal courts. Judges have not agreed. A federal appeals court in the Third Circuit and a Tennessee district court sided with Kalshi on preliminary relief, while the Sixth Circuit and district courts in Arizona, Maryland and Nevada went the other way, according to the July 7 New York opinion. The argument that federal law pre-empts state gambling rules has therefore won and lost depending on the court.
Other states. Massachusetts has also sued Kalshi; New York's attorney general filed a brief supporting that suit. Washington has also sued, according to news reports; we did not verify the filing. Utah sued Kalshi in October 2026.
The federal response. The CFTC and the Justice Department sued Utah on October 26, arguing that the event contracts are swaps under federal law and that Congress made the CFTC the only regulator of these markets. The complaint also cites recent federal rulings in Illinois and Minnesota that barred state enforcement. Covers reported that Utah was the tenth state the CFTC has sued over this question. That figure is not independently verified.
State treatment of online wagering already varies (see is online gambling legal in the US). This section summarises public filings as of October 2026 and is not legal advice.
Takeaways for affiliates
Regulatory status is a selling point. The January 2025 change to intermediated trading opened broker distribution that Polymarket's offshore setup did not have. Say which body regulates a product and where that cover ends.
Sports event contracts compete for your users. They are the product state suits target, and both platforms pushed US sports markets. Track these platforms next to your sportsbook marketing spend benchmarks, and check whether any affiliate programme exists before you plan around one.
Keep state pages dated. New York and Utah sued in 2026, and federal courts in different circuits disagree. Like the sweepstakes casino bans, one ruling can make a page wrong overnight.
Watch partner deals. Funding releases list broker, index and payments partners. A new broker or league deal is an early sign of where volume may go next.
Treat every number as a snapshot. Valuations come from private rounds and most volume figures from the companies themselves. Date them and say who published them.
No promo claims you cannot check. Bonus and referral offers change fast and states are watching them.
FAQ
Is Kalshi legal?
Kalshi is a CFTC-designated contract market, which it says puts it under federal law. Several states disagree. Federal courts have split on whether federal law pre-empts state gambling rules for its sports contracts: a federal judge in New York refused to block that state's laws on July 7, 2026, while a federal appeals court in the Third Circuit ruled for Kalshi. Suits in New York, Massachusetts and Utah are open.
How do Kalshi and Polymarket differ?
Kalshi has been regulated in the US since 2020 and, from 2025, can be offered through brokers. Polymarket grew offshore on crypto rails and re-entered the US in 2025 through a CFTC-licensed exchange it reportedly acquired.
Who owns Polymarket?
Polymarket is private and led by founder Shayne Coplan. Intercontinental Exchange, owner of the NYSE, has invested $1.6 billion.
Is Kalshi gambling?
New York argues that betting on uncertain event outcomes meets its legal definition of gambling. Kalshi and the CFTC say its contracts are federally regulated swaps. Federal courts have split at the preliminary stage, and no final ruling has settled the question.
