Polymarket's CEO, Shane Copeland, rang the opening bell at the New York Stock Exchange in November. According to two sources familiar with the matter, the prediction market platform Polymarket is in discussions with investors to raise $400 million at a valuation of approximately $15 billion, which includes the new capital from this round. Intercontinental Exchange, the parent company of the NYSE, announced last month that it had committed $600 million to this funding round, although it did not disclose the valuation at that time. The new financing efforts are building upon this initial commitment. Another source indicated that Polymarket aims to attract additional strategic investors beyond Intercontinental Exchange, potentially increasing the total size of this funding round to as much as $1 billion. The funding round has not yet been finalized, and the terms are still subject to change. This valuation level shows a notable gap compared to its competitor, Kalshi. Last month, Kalshi completed a $1 billion funding round led by Coatue Management at a valuation of $22 billion. Despite this difference, Polymarket's latest proposed valuation still represents an increase of over 66% compared to its previous round in October of last year, when the company raised $1 billion from Intercontinental Exchange at a post-money valuation of $9 billion. One possible reason for the valuation discrepancy is that Polymarket, being the largest prediction market platform outside the United States, only recently launched a platform for US users and has just begun generating revenue through fees. In contrast, a report last month indicated that Kalshi has long served the US market and has seen its annualized revenue rise to $1.5 billion. Unlike Kalshi, a six-year-old startup, Polymarket settles transactions via blockchain. For over a year, the company has been considering issuing a token, a common digital asset in crypto projects. According to informed sources, the company ultimately plans to pursue an initial public offering (IPO). These funding discussions are occurring amid a surge in activity on prediction markets, which have gained popularity by allowing users to place bets on outcomes such as the 2024 US presidential election. Both Kalshi and Polymarket enable users to purchase event contracts for less than $1—a type of derivative that pays out if the predicted outcome occurs. Users pay the contract fee upfront and can recover their principal plus a profit if their prediction is correct. These platforms offer low investment thresholds and cover a wide range of events, from predicting the champion of the US college basketball tournament "March Madness" and the outcomes of US military actions against Iran, to the release dates of new AI models. They have become a popular alternative to traditional sports betting and stock trading. However, some precisely timed bets have raised concerns about insider trading. Earlier this year, OpenAI dismissed an employee for using confidential company information to trade on a prediction market. More recently, reports have surfaced of individuals profiting from well-timed bets on events related to US-Iran conflicts. Bipartisan lawmakers have proposed legislation to prohibit federally elected officials and government employees from trading contracts on prediction markets using non-public information. Polymarket has previously faced regulatory challenges: in 2022, the US Commodity Futures Trading Commission (CFTC), which oversees derivatives trading, barred the platform from accepting US customers, citing a lack of regulatory approval. Last year, Polymarket gained approval to launch a new platform for US users after acquiring a US-registered derivatives exchange and clearing organization. Both Polymarket and Kalshi have implemented measures to combat insider trading. Meanwhile, Kalshi is involved in legal disputes with regulators in several US states who are attempting to block it from offering sports betting services—a significant source of tax revenue in some states. Kalshi has stated that the allegations are unfounded, emphasizing that it is regulated by the federal CFTC.
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