Kalshi raised $1 billion this week at a $22 billion valuation, one of the largest financings yet in prediction markets. At the same time, the CFTC closed its public comment window on prediction market regulation after receiving more than 1,500 submissions.
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These developments highlighted the same underlying trend: prediction markets are growing fast enough to attract institutional capital, while regulators and industry groups are still arguing over what these products actually are.
What Moved the Prediction Markets
This Week Kalshi Closes $1 Billion at $22 Billion Valuation
On May 7, Kalshi announced a $1 billion Series F round valuing the company at $22 billion — one of the largest financings yet in prediction markets. Kalshi now accounts for more than 90% of U.S. prediction market activity.
The funding will be used to expand block trading, build institutional integrations, and expand the platform’s relationships with professional trading firms and financial institutions.
The CFTC Review Reveals a Split Over What Prediction Markets Are
The CFTC closed its public comment window on prediction market regulation with more than 1,500 submissions, exposing a sharp divide over how event contracts should be classified.
Industry participants including Coinbase and Kalshi argued that prediction markets function as financial derivatives tied to price discovery and hedging. State gaming regulators and consumer groups argued the opposite: that these products are effectively gambling products structured as financial products.
This week, the CFTC also opened a review of its Commitments of Traders reporting framework, bringing prediction market platforms closer to the transparency standards used in traditional commodity markets.
Flutter Bets on Prediction Markets as a Market Maker
Flutter Entertainment said this week that it is already generating revenue from prediction markets as a market maker. CEO Peter Jackson said the company is using its existing pricing infrastructure to quote event contracts and earn revenue from the spread between buy and sell orders.
Flutter is operating as a liquidity provider as prediction markets increasingly attract firms built around pricing, inventory management, and risk infrastructure.
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Quote of the Week
The gambling industry is framing prediction markets not as financial products, but as a way to bypass state sports betting laws. The American Gaming Association put its position directly this week:
New data from @EilersKrejcik shows the majority of sports prediction market activity is taking place in states where online sports betting remains illegal.
— American Gaming Association (@AmericanGaming) May 6, 2026
That’s a blatant dismissal of voters’ decisions and state laws that chose not to legalize online sports betting.
Read… pic.twitter.com/9yhD0yN8dF
Number of the Week
800% is the increase in institutional trading volume on Kalshi over the past six months, disclosed alongside the company’s $1 billion funding round on May 7. The figure reflects how quickly prediction markets are attracting institutional participation.
The Friction of the Week
Prediction markets are scaling faster than the political framework around them. Kalshi raised $1 billion this week at a $22 billion valuation, while weekly prediction market volume moved above $7 billion.
Prediction markets are heating up.
— Martins (@wogaam) May 4, 2026
Last week closed with over $7B in Weekly Notional Volume, just $350M away from the current All-Time High and marking a new record.@Kalshi led the week again with roughly $3.8B in Notional Volume, accounting for about 54% of the total and… pic.twitter.com/MrxRRhao0O
Meanwhile, lawmakers pushed for restrictions on the very contract categories driving most of that activity. The pressure reflects a broader disagreement over what prediction markets actually are.
To the industry, event contracts are financial products tied to price discovery and hedging. To critics — including state gaming groups and several lawmakers — they function more like sports betting or gambling products operating under a derivatives framework.
That distinction determines who regulates the market, where it can operate, and which rules apply. As platforms expand institutionally and move into commodities and perpetual futures, the gap between those interpretations is becoming harder to contain.
Bottom Line
This week showed how quickly prediction markets are moving into the financial mainstream. Kalshi raised institutional capital at a scale normally associated with established exchanges, while Flutter positioned prediction markets as another venue for market-making and spread capture.
At the same time, the regulatory debate hardened. The CFTC’s comment process exposed a basic divide between firms that view event contracts as financial derivatives and critics who see them as gambling products operating under federal cover.
The central question is whether prediction markets will ultimately be regulated like financial markets or gambling products.
