Sacra estimates that Kalshi generated $24M in revenue in 2024, up 1,220% from $1.8M in 2023. This explosive growth was driven by a trading volume surge to $1.97B, compared to just $183M the previous year.

The company's revenue spike was directly tied to the 2024 US presidential election. Courts cleared approval for Kalshi's election markets just a month before voting day, creating a wave of publicity.

Election night alone saw Kalshi reach #1 finance app globally on iOS, with 500K concurrent users and over $1B in volume on the Trump-Harris contest. The election spike was impossible to miss when examining daily trading data: Kalshi averaged $42M daily volume in November 2024, up from just $700K in September 2024 before the court ruling.

January 2025 is averaging $5.8M daily – well above pre-election baselines but significantly below election peak. Kalshi's effective commission rate across all volume stands at approximately 1%.

Kalshi reached a post-money valuation of $787 million in October 2024, when investors (led by Sequoia and Neo) provided a mix of short-term loans and began negotiating a new equity round of $50 million+ to shore up election-related liquidity.

Since its 2018 founding, the company has raised about $106 million in equity across seed, Series A and follow-on extensions, plus an additional $50 million in debt financing in late 2024.

Kalshi operates a regulated prediction market exchange where users bet on future outcomes through binary Yes/No contracts. These contracts are priced between $0.01 and $0.99, with the price reflecting the market's perceived probability of an event occurring. A correct prediction pays out $1 per contract, regardless of the purchase price.

Unlike traditional sportsbooks, Kalshi doesn't set odds or take positions against users. It simply matches opposing predictions and takes a transaction fee. The platform integrates third-party data sources (like Rotten Tomatoes for movie predictions) to determine outcomes automatically without subjective judgment.

A user can open the app, browse available markets (ranging from "Will the Fed raise rates in June?" to "Will the Chiefs win the Super Bowl?"), and place a bet by purchasing contracts. If you think an event has a 60% chance of occurring but see the market pricing it at $0.50 (50%), you can buy "Yes" contracts at what you perceive as a discount.

The contract value changes in real-time based on market sentiment, and users can sell positions before the event's resolution to lock in profits or cut losses. The platform features diverse categories including financial indicators (S&P 500 movements), political outcomes (presidential elections), cryptocurrency predictions (Bitcoin price targets), entertainment events (Oscar winners), and now sports results. Most markets resolve within days or weeks, though some longer-term predictions exist.

Kalshi operates a B2C two-sided prediction marketplace with a maker-taker fee structure. The company charges transaction fees only on "taker" orders (immediate purchases at market price), typically ranging from 0.07% to 7% depending on contract probability. "Maker" orders (limit orders providing liquidity) incur no fees, incentivizing traders to provide market depth.

The fee schedule employs a sliding scale where lower-probability bets (longshots) face higher fees. For example, a contract with 80% win probability incurs a 1.4% fee, while a contract with just 20% win probability carries a 5.6% fee. This structure ensures Kalshi monetizes both sides of the probability spectrum.

Kalshi's business requires substantial fixed investments in regulatory compliance, market-making infrastructure, and risk management systems. However, once established, the exchange benefits from near-zero marginal costs on incremental trading volume – creating powerful scale economics similar to traditional financial exchanges.

The company has implemented several liquidity-boosting mechanisms: market makers receive rebates up to 1% through a tiered reward system (capped at $7,000 weekly), deposits as low as $1 are accepted, and the platform offers interest (up to 4.05% annually) on idle cash balances. These features reduce funding friction and encourage capital commitment to the platform.

Kalshi's CFTC-regulated status provides a strategic advantage by enabling nationwide operation without the state-by-state licensing requirements that constrain traditional sports betting operators.

Polymarket represents Kalshi's primary competitor in event contracts, processing $9B in 2024 trading volume across 314K active traders. However, Polymarket remains geofenced from US users and dependent on crypto rails that limit mainstream adoption.

While Polymarket's decentralized nature allows it to offer markets on any topic without regulatory constraints, this same lack of oversight creates legal precarity and prevents institutional participation. Kalshi's CFTC regulation provides clear advantages in accessing the lucrative US market and attracting risk-averse traders who want regulatory protection.

DraftKings and FanDuel dominate the $30B US sports betting market with 85% combined market share. These incumbents operate fundamentally different business models – they set odds and profit when customers lose, earning 7-9% margins by taking the opposite side of bets.

However, their expansion is constrained by state-by-state gaming licenses and regulatory scrutiny from gaming boards. Kalshi's federal CFTC regulation allows it to operate sports markets in all 50 states immediately, bypassing the patchwork of state regulations that limit traditional sportsbooks to roughly 38 states.

Companies like Underdog Fantasy and PrizePicks occupy an adjacent space with their Pick'em products that function similarly to prediction markets. These platforms have already faced regulatory challenges, including a $17.5M settlement between Underdog and New York state.

As states increasingly scrutinize whether these contests constitute gambling rather than games of skill, fantasy operators face potential market restrictions. Kalshi's explicit regulatory approval as a derivatives exchange provides clearer legal footing than the ambiguous skill-game designation fantasy operators rely on.

Sports now represents 75% of Kalshi's volume, positioning the company to attack the $30B US sports betting TAM that continues growing at 24% annually. Unlike competitors constrained by state gaming boards, Kalshi's federal regulation enables immediate 50-state availability.

The company recorded $513M in trading volume during March Madness and $453M in April during NBA Playoffs and the Masters. While below its $1.2B election month peak, these figures demonstrate sustained engagement well above the $20-30M pre-election monthly baseline.

The path from prediction markets to higher-value gaming products mirrors the progression seen in daily fantasy sports companies. Only six states currently allow iGaming (online blackjack, poker, slots), which generates 70% margins compared to 30% for sportsbooks and 12% for fantasy sports.

Kalshi's existing user base and regulatory framework position it to capture value as more states legalize online casino games. The company's exchange model and CFTC oversight may provide a differentiated regulatory approach to entering these markets.

Prediction market prices offer unique leading indicators for everything from Fed policy decisions to election outcomes. Institutional investors and media organizations currently pay $50K+ annually for alternative data from polling firms and sell-side research.

As Kalshi scales liquidity in categories like elections, crypto prices, and economic indicators, its price feeds could become valuable data products. Real-time market sentiment data has applications across trading desks, newsrooms, and corporate strategy teams seeking predictive insights beyond traditional forecasting methods.

Volume concentration: Kalshi's trading activity shows extreme concentration, with just 7 categories accounting for 50% of total volume and the top 20 categories representing ⅔ of all 2024 activity. Most markets remain thinly traded, hampering price discovery and deterring user engagement. This creates a challenging bootstrap problem – users avoid low-liquidity markets, which prevents those markets from developing sufficient liquidity to attract users.

Regulatory backlash: Despite current CFTC approval, Kalshi's expansion into sports betting could attract increased regulatory scrutiny, particularly around gambling addiction concerns. Sports betting is widely recognized as a common gateway to problematic gambling due to its accessibility, rapid resolution cycle, and mass appeal. Addiction specialist Anna Lembke noted in a January 2025 New York Times interview how gambling disorders saw a "huge increase" following smartphone-enabled sports betting's emergence.

Post-election sustainability: Kalshi's explosive 2024 growth stemmed primarily from a one-time event – the presidential election – which cannot be replicated until 2028. While January 2025 volume remains elevated compared to pre-election levels, it represents just 14% of November's peak. The company is clearly staking its 2025 growth on successful expansion into sports, but competition is fierce and sustained engagement will require constant innovation and marketing investment.