Kalshi's $40 billion price was already in talks before Friday's court loss

Reuters reported on Tuesday, September 29, that Kalshi is in advanced talks to raise about $1 billion at a valuation of about $40 billion. That price was already under discussion in August, before a federal court ruled against the company on Friday.

On Wednesday, August 12, The Information reported that Sequoia Capital and Wellington Management were in talks to back Kalshi at about $40 billion, in a round of at least $750 million. What is new, Reuters said, is that Tiger Global Management and Dragoneer Investment Group are in the talks, and that the round is about $1 billion.

Reuters said Sequoia, which already owns a stake, is in talks to lead the round with Wellington, and that Alfred Lin, one of Sequoia's co-leaders, sits on Kalshi's board. The sources Reuters cited expect the round to be finished in the coming weeks, though it has not closed and the terms can still change.

Reuters said Kalshi and Tiger Global declined to comment, and that Sequoia, Wellington and Dragoneer did not respond to its requests for comment.

The price in the talks is nearly twice what investors paid in May. On Thursday, May 7, Kalshi said it had raised $1 billion at a $22 billion valuation, in a round led by Coatue, and Sequoia took part. That $22 billion is what investors have actually paid.

Kalshi runs an exchange where people trade contracts on whether something will happen, including sports. In that May announcement, the company said annualized trading volume had more than tripled over the prior six months, from $52 billion to $178 billion.

A proposed $1 billion financing, reported on Monday, August 31, would value Polymarket at $21 billion after the new money. As of Thursday, September 10, that round was still being raised, so $21 billion is a reported target, not a closed price.

Friday's ruling on sports contracts

On Friday, September 25, a unanimous panel of the U.S. Court of Appeals for the Sixth Circuit said Kalshi had not shown that its sports-event contracts are swaps, a type of financial contract under federal commodities law. Even if they were, the court said, that law does not override the gambling laws of Ohio or Tennessee.

The judges left in place an Ohio court's refusal to block the state, and they lifted an order that had stopped Tennessee from enforcing its laws against Kalshi. Both cases go back to the lower courts. The ruling is about sports contracts in those two states.

Since July 2024, sports had accounted for 80% of Kalshi's trading volume, Pew Research Center found in an analysis published on Wednesday, May 27.

Tennessee Attorney General Jonathan Skrmetti called the decision a "great win" for his state.

"Sports wagering is heavily regulated because it can do a lot of harm, and I'm glad we thwarted Kalshi's efforts to remove every safeguard and put Tennessee sports bettors at risk," he said.

Kalshi said it does not expect the decision to survive further legal review.

"The ruling shows exactly why a state-by-state patchwork doesn't work," Kalshi spokesperson Dani Lever said.