Updated February 2026

What Is Kalshi?

Kalshi is a federally regulated exchange that lets people trade on the outcomes of real-world events — essentially a market where users buy and sell “Yes” or “No” positions on whether something will happen. The company was started in 2018 by MIT classmates Tarek Mansour and Luana Lopes Lara and has since exploded into one of the fastest-growing financial platforms in the country, pioneering event contracts as an entirely new asset class.

How Does It Work?

The platform allows both everyday traders and institutions to place trades across a broad spectrum of future events. Markets span economic data points like inflation and employment figures, political races, sports matchups, entertainment outcomes, and even weather forecasts. Every contract boils down to a straightforward yes-or-no question, and its price reflects the crowd’s real-time estimate of the likelihood that the event occurs. If your prediction turns out to be correct, each share pays out $1.

Regulation and Legal Standing

What sets Kalshi apart from most competitors is its legal footing. The platform is registered with the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market (DCM) — the first exchange to receive this designation specifically for event-based trading. In August 2024, Kalshi’s clearing affiliate, Kalshi Klear LLC, was also approved as a derivatives clearing organization (DCO), reinforcing its compliance infrastructure. Then in May 2025, Kalshi secured a significant legal victory over the CFTC itself, further solidifying its regulatory recognition in the United States.

That said, the legal picture is far from settled. While Kalshi operates under federal oversight, more than a dozen U.S. states have challenged the platform, arguing that its event contracts — particularly those tied to sports — amount to illegal gambling. In 2025, a New Jersey federal court ruled in Kalshi’s favor when the state attempted to shut down its operations, but similar disputes are playing out across the country. Because Kalshi is regulated by the CFTC rather than state gaming commissions, it avoids state-level licensing fees and gaming taxes — a distinction that has drawn pushback from traditional sportsbook operators and state regulators alike.

Explosive Growth and Major Milestones

Kalshi’s trajectory in 2025 and early 2026 has been nothing short of remarkable:

• $11 billion valuation: In December 2025, Kalshi announced a $1 billion Series E funding round at an $11 billion valuation, led by Paradigm with participation from Sequoia, Andreessen Horowitz, Meritech Capital, ARK Invest, CapitalG, Y Combinator, and others.
• Surging user base: Monthly active users jumped from 600,000 at the start of 2025 to 5.1 million by early 2026, according to Sensor Tower data — an increase of more than 8x.
• Massive trading volumes: Weekly trading volume now regularly exceeds $1 billion, with the platform and its competitors generating over $44 billion in combined volume during 2025. On Super Bowl Sunday alone (February 8, 2026), Kalshi processed $871.5 million in a single day.
• Kalshi Research: In December 2025, the company launched a dedicated research division to support academic study of prediction markets and released a study showing its inflation forecasts outperformed Wall Street consensus estimates.
• Media and sports partnerships: Kalshi probabilities now appear in CNBC’s on-screen graphics. The platform has also struck deals with sports organizations, including the Chicago Blackhawks, and joined forces with FanDuel on a collaborative prediction product called FanDuel Predicts.

The Competitive Landscape

Kalshi isn’t operating in a vacuum. It shares the prediction market space with Polymarket, a crypto-native platform that dominates non-sports categories but remains unavailable to U.S. users under CFTC rules. Together, the two platforms form something of a duopoly that accounted for $4.3 billion in combined weekly volume in mid-February 2026.

Meanwhile, established financial and gaming companies are moving in. Robinhood is building its own regulated prediction markets exchange, DraftKings and FanDuel have each launched competing prediction products, and firms like Crypto.com and Coinbase have entered the space as well.

What Comes Next?

Supporters of prediction markets contend that they produce more accurate forecasts than traditional polls or expert panels, since traders have real money riding on the results. Industry observers expect the sector to keep accelerating, with prediction markets increasingly embedded in media coverage and financial analysis.

The biggest open question remains regulation. State-level legal battles continue to test the boundaries of federal authority over event contracts, and some lawmakers are exploring new age restrictions and tax structures for the industry. Whether Kalshi can sustain its growth will depend in large part on how these regulatory tensions are resolved — but with billions in volume, millions of users, and deep-pocketed investors, the platform appears well-positioned to remain at the center of the prediction market movement.