Sacra estimates that Kalshi generated $23.8M in revenue in 2024, up 1,221% from $1.8M in revenue in 2023.

The company's explosive growth 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 is valued at $787M as of their January 2022 Series B. They've raised about $106M in total.

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.

Kalshi's primary direct competitor is Polymarket, a crypto-based prediction platform that lacks Kalshi's regulatory approval in the US. While Polymarket's blockchain-based system offers some technical advantages and international accessibility, US users face legal barriers to participation – giving Kalshi an effective monopoly on regulated prediction markets in America.

These crypto alternatives operate in regulatory gray areas, which creates substantial trust issues for potential users. When real money is at stake, the certainty of regulation and legal recourse provides Kalshi with a significant competitive advantage for mainstream US adoption.

DraftKings, FanDuel, and other established sports betting platforms represent Kalshi's most formidable competition following its expansion into sports markets. These incumbents enjoy massive user bases, extensive market-making experience, and deep pockets for marketing.

The key difference lies in business model: traditional sportsbooks set odds and take positions against users, earning 7-9% margins by creating intentional pricing inefficiencies. Kalshi's neutral exchange approach results in tighter spreads and more efficient markets, potentially offering better value to sophisticated bettors.

Where Kalshi holds a significant advantage is geographic reach – its federal CFTC regulation allows immediate nationwide operation, while traditional sportsbooks remain illegal in approximately 12 states and face complex state-by-state compliance requirements.

As Kalshi scales particular prediction markets, its pricing data serves as a valuable alternative to traditional forecasting services. The institutional financial market pays premium fees to polling firms, economic forecasters, and alternative data providers – often $50K+ annually for comparable market intelligence.

Established firms like Bloomberg, Reuters, and specialized alt-data vendors offer competing information products, but Kalshi's continuous real-time probability assessments represent a fundamentally different approach to forecasting compared to traditional polling or expert analysis.

Kalshi has begun positioning itself as an information source alongside its exchange function. While its data currently lacks sufficient depth in many categories, high-liquidity markets like presidential elections and major financial indicators could become credible reference points for institutional decision-makers.

Kalshi's January 2025 entry into sports prediction markets taps into a massive existing market estimated at $20B in 2023 and projected to reach $30B by 2028 according to DraftKings. This expansion was strategically timed to capitalize on Super Bowl interest.

Sports betting offers two critical advantages for Kalshi: mass appeal (particularly among young men) and frequent trading opportunities with clear, near-term resolutions. While presidential elections generate enormous but infrequent volume spikes, sports provide ongoing engagement opportunities across thousands of events annually.

Kalshi's regulatory structure gives it a unique advantage in sports – immediately offering legal prediction markets in all 50 states, while traditional sportsbooks remain illegal in approximately 12 states. This regulatory arbitrage creates a genuine go-to-market advantage for user acquisition.

Kalshi continues expanding beyond its initial focus on economic indicators. The company has launched markets across diverse categories including climate (weather events), crypto (Bitcoin price targets), entertainment (Oscar winners), elections (presidential and congressional races), and most recently sports.

Each new category broadens Kalshi's total addressable market and creates cross-selling opportunities to existing users. Financial markets alone – specifically S&P 500 price predictions – accounted for one-third of Kalshi's volume in 2023, demonstrating sustainable demand beyond headline events.

Recently announced bundling capabilities will allow users to construct synthetic prediction securities across different markets, creating opportunities for more sophisticated trading strategies that could attract professional traders and institutions seeking unique exposures.

Beyond transaction fees, Kalshi's market data itself represents a potentially lucrative revenue stream. Prediction market prices offer unique real-time probability assessments for everything from Federal Reserve policy decisions to election outcomes.

Institutional investors, media organizations, and corporate decision-makers traditionally source similar forecasts from expensive polling firms, economic analysts, and alternative data providers that often charge $50K+ annual licenses. While Kalshi's current market depth remains insufficient in many categories, its high-volume markets already offer credible signals.

As of late 2024, Kalshi had begun positioning itself as an information source alongside its exchange function. As market liquidity grows across more categories, this data business could develop into a significant complementary revenue stream with software-like margins.

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.