Polymarket Mulling Capital Raise at $9 Billion Valuation, Kalshi at $5 Billion

Polymarket Mulling Capital Raise at $9 Billion Valuation, Kalshi at $5 Billion

Prediction market giants  According to rumors, Polymarket and Kalshi are considering new fundraising that would put their respective valuations at $9 billion and $5 billion, which is significantly higher than the companies' prior valuations.

Among the investors in Polymarket are Vitalik Buterin, co-founder of Ethereum, Donald Trump Jr., and Peter Thiel's Founders Fund.  In August, Trump Jr.'s 1789 Capital firm invested several million dollars in Polymarket.  He holds advisory positions at Polymarket and Kalshi.

"Polymarket has considered an offer that would value the company as much as $9 billion, according to people who have spoken to the company’s leaders,” The Information reported. “That would be a huge jump in price for the startup, which raised money at a $1 billion valuation earlier this summer.”

At least one unidentified investor made an offer for a stake in Polymarket, valuing the company at $10 billion, according to sources who spoke to another media under the condition of anonymity.

Polymarket and Kalshi Valuations Are Soaring

If the rumors that Kalshi and Polymarket might be worth $5 billion and $9 billion are true, it shows that investors' willingness to take bets on derivatives exchanges has increased dramatically in a matter of months.

In June, Kalshi completed a $185 million Series C investment round, valuing the business at $2 billion.  Polymarket conducted a capital raising at a $1 billion valuation around the same time.  Said another way, Kalshi’s valuation has more than doubled in 90 days.  In just a few months, Polymarket's valuation looks to have tripled to $3 billion.

Polymarket and Kalshi would be worth more than Rush Street Interactive (NYSE: RSI), a pure-play iGaming/sports betting stock with a market capitalization of $4.83 billion as of September 12, at valuations of $9 billion and $5 billion, respectively.

Kalshi and Polymarket may also be worth as much as or more than other well-known interactive gaming companies that are subsidiaries of bigger omni-channel gaming companies at those speculated price points.

Investors Focus on Forecasts

Private market investors are clearly enthusiastic about prediction market operators, businesses that are increasingly at odds with the sports betting sector, as was the case in the early days of the online sports betting boom. Prediction markets' interaction with cryptocurrencies—a feature that licensed sportsbooks lack—is largely responsible for that ebullience.

Expanded use cases are made possible by some yes/no derivatives exchanges that are either fully based in cryptocurrency or, at the very least, let customers fund accounts in specific digital currencies.

According to The Block, this year's prediction market fundraising is the best on record, with a total of $216 million over 11 deals—more than twice as much as last year and more than three times as much as in 2021.