Kalsi’s annual revenue run rate has exceeded $2 billion as the prediction market operator has entered early discussions with investment banks about a possible initial public offering, Information reported.
The Information, citing people familiar with the matter, reported that Kalsi had held informal talks about an IPO while the business continues to grow rapidly. This revenue figure represents a significant increase from the $1 billion annual run rate that the Wall Street Journal previously reported in March.
A Kalsi spokesperson declined to comment on the IPO talks when contacted by The Block.
The renewed interest in going public comes weeks after the company secured a $1 billion Series F at a valuation of $22 billion. The round was led by Coatue with participation from Sequoia Capital, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley, and ARK Invest.
Along with this growth, trading activity continues to increase. According to DeFiLlama data, Kalsi recorded a trading volume of $16.81 billion in May, up from $14.81 billion in April. Competitive platform Polymarket generated $7.08 billion in trading volume last month, compared to $9.01 billion the previous month.
Regulatory pressure increases as business expands
The rise in trading volume and investor interest has coincided with increased scrutiny from lawmakers, gaming organizations, state regulators, and federal authorities on how prediction markets should be regulated in the United States.
Earlier this week, several U.S. gaming industry groups asked the Senate to include language in the pending cryptocurrency market structure bill that would explicitly prevent sports and casino-type prediction markets from operating under federal derivatives rules, according to a report by Semafor.
Some of the organizations supporting this effort include the American Gaming Association, the Indian Gaming Association, and the Gaming Equipment Manufacturers Association. In a letter cited by Semafor, the organizations argued that prediction market operators are effectively expanding sports betting nationwide while circumventing state and tribal gaming frameworks.
Their push arrives as lawmakers continue to consider the Clarity Act, a major cryptocurrency market structure proposal that has already passed the Senate Banking Committee.
Political opposition is also accompanied by legal challenges at the state level. Kentucky this week became the latest state to file charges against Calci, Polymarket, and their affiliates for operating an illegal and unlicensed sports betting platform in the state. Similar measures are popping up across multiple jurisdictions, including Ohio, Nevada, New Jersey, Maryland, Montana, Illinois, New York, Connecticut, Arizona, Wisconsin, New Mexico and more.
Federal and state regulators remain at odds
Legal battles over prediction markets have increasingly focused on jurisdictional disputes between state gaming authorities and the Commodity Futures Trading Commission.
Just a few days ago, the CFTC filed a lawsuit against the state of New Mexico after state authorities filed suit against Calci for allegedly offering unlicensed sports betting products. The regulators argued in the complaint that event contracts listed on federally regulated exchanges fall under the exclusive purview of the Commodity Exchange Act and are not subject to state gaming enforcement.
CFTC Chairman Michael Selig said at the time that New Mexico was attempting to override established law and precedent governing federally regulated exchanges.
At the same time, prediction market critics are questioning whether sports-related event contracts are even subject to derivatives regulation at all. Former CFTC Chairman Gary Gensler told the Sixth Circuit Court of Appeals earlier this month that sports prediction contracts do not function like traditional swaps because they are not used to hedge commercial or economic risks.
However, while continuing to uphold its oversight role, federal regulators are developing a framework to review event contracts on an individual basis rather than imposing category-wide restrictions. The agency is subjecting certain contracts to scrutiny and considering criteria for allowing others to remain listed, according to a report in the Wall Street Journal published this month.
