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May 7 (Reuters) - Prediction market platform Kalshi said on Thursday it had raised $1 billion in its latest funding round that valued the company at $22 billion, as institutional investors increasingly adopt event-based trading contracts.

The round was led by Coatue, with participation from Sequoia Capital, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley, and ARK Invest.

Venture capital firms have poured money into late-stage startups, helping these companies remain private for longer and avoid the public market fluctuations seen last year and in early 2026.

Kalshi said it plans to use the proceeds to expand its offerings to promote adoption among hedge funds, asset managers, proprietary trading firms, and insurance companies.

Over the past six months, institutional trading volume has increased 800%, the company said.

Platforms such as Kalshi and rival Polymarket allow users worldwide to trade binary contracts on outcomes in politics, sports, economics and entertainment. The model has drawn strong backing for its event‑based trading and risk management approach.

"There are few categories in recent history that have scaled this quickly outside of AI," said Kalshi CEO Tarek Mansour.

"Event contracts could become a trillion-dollar market, and we're still in the early stages of that transition."

The company's biggest competitor, Polymarket, was reportedly in talks to raise money at an about $15 billion valuation, The Information reported in April, citing two people familiar ​with the talks.

The latest financing round follows Kalshi's successful court challenge against the U.S. Commodity Futures Trading Commission, after which the startup gained approval to list contracts related to the presidential election.

However, regulatory problems have beleaguered the growth of these companies, with critics calling them nothing more than gambling platforms. Kalshi is facing court cases in some states for its sports contracts.

Kalshi and Crypto.com launched a national alliance of prediction market operators in December focusing on strengthening the federal framework for the sector.