Kalshi eyes 40 billion dollar valuation as rivals hit multiyear lows

Flutter Entertainment and DraftKings reached multiyear stock lows in the same week Kalshi began circulating a forty billion dollar valuation figure. That gap is the story the gaming industry has not fully priced.

To understand what is happening in that gap, start with the regulatory calendar. The CFTC submitted two separate rule proposals to the White House Office of Information and Regulatory Affairs — one that would expand the definition of a swap to cover event contracts, and a second that would exclude gaming-style products from that definition entirely. Those two proposals point in opposite directions, which tells you the agency is not resolving this question so much as deferring it upward. The White House now holds the timeline, and that timeline is not public.

The Sixth Circuit handed the states a win on Tennessee's enforcement action. Kalshi had argued its contracts in that state qualified as swaps and therefore sat outside state gambling jurisdiction. The court disagreed. That ruling, taken together with the earlier circuit split, makes the Supreme Court path Bill Miller predicted at G2E look less like advocacy and more like arithmetic.

So the legal pressure is real, and the regulatory path is genuinely unclear. The consensus read — that Kalshi is in serious trouble — follows from those facts. I don't think that's where this lands.

Here is the mechanism the reporting has not connected: Kalshi's valuation is not a market-clearing price. It is a lobbying instrument. A company that can credibly claim a forty billion dollar private valuation while pursuing state-by-state legislative relationships — which it is doing, according to Truthout's reporting on its lobbying posture — is not behaving like a company that expects to lose at the Supreme Court. It is behaving like a company that expects to survive long enough for the regulatory environment to shift, or for one state legislature to create the opening it needs.

I have seen this before. A regulated industry under legal siege that keeps expanding its geographic footprint is not confused about its situation. It is buying optionality. The litigation costs are the price of presence, and presence is what matters when the rule finally writes itself around the existing facts on the ground.

Flutter and DraftKings are priced for a world in which prediction markets lose cleanly and the existing sportsbook operators recapture that revenue. That assumption has two problems. First, the CFTC's dual proposals suggest the federal definition of an event contract is genuinely unsettled — a clean state win at the Supreme Court is not the only possible outcome. Second, even in a loss scenario for Kalshi, the forty billion dollar number is already inside the heads of every institutional investor looking at Flutter at its current multiple.

The Illinois partial ruling in Kalshi and Coinbase's favor — sources confirm a partial ruling, though the scope remains unclear — means the state-by-state picture is still uneven. Uneven enforcement does not shut a market down. It fragments it, which is its own kind of persistence.