You Can Be Worth $20 Billion and Still Get Debanked
The week's prediction-market headlines are a lesson in the one risk growth can't outrun.
Prediction markets are one of the hottest corners of finance right now. They’re also a live case study in the risk that a valuation can’t buy its way out of.
Last week the Financial Times reported that JPMorgan cut its banking relationship with Polymarket back in October, citing regulatory concerns, and told the company to find a new bank. Polymarket pushed back on the framing, telling the FT it still works closely with JPMorgan across multiple areas, and the bank reportedly kept some ties open in case it wants an underwriting role in a future IPO. Reuters confirmed the core of it through its own source. Around the same window, a judge ordered Kalshi to stop offering most wagers in Washington state, and New York City opened a probe into both platforms. On the other side of the ledger, the CFTC has told Kalshi to keep operating despite a New York lawsuit. Federal tailwind, state and banking friction, all at once.
Keep the numbers in mind while you read that. Kalshi was reportedly valued around $22 billion in May and, per FT reporting, has been in talks for a round near $40 billion. Polymarket sat around $15 billion and, according to Bloomberg and CNBC, has been seeking north of $20 billion, with both reportedly clearing a billion dollars in annualized revenue. These aren’t fragile startups. And they still spent the week playing defense against courts, regulators, and a bank.
Here’s the model from my book: inversion. Most founders ask “how do we grow faster than the other guy?” Inversion flips it: “what’s the thing that kills us, and are we building to avoid it?” In consumer software the answer is usually a competitor or churn. In regulated markets, it almost never is. It’s the perimeter: a regulator, a court, a state attorney general, or a bank quietly deciding you’re too much risk to hold. None of those show up on your growth chart until the day they end you.
I built prediction markets and derivatives at Robinhood, so I’ve watched this movie before. The product can be brilliant and the demand real, and none of it matters if you lose the rails underneath it. Banking access in particular is a dependency almost nobody inverts on until it’s gone.
Full disclosure: I’m CPO at /mkt, where we tokenize athlete income and made the call early to build inside the perimeter, using a Reg A+ framework with registered trading infrastructure. I’m not holding that up as the only right answer, and I’m not knocking Kalshi or Polymarket, who’ve won plenty of their own regulatory fights. The point is narrower. In a markets company, where you choose to stand relative to the rulebook is the first design decision, not the last.
Spence’s take: The prediction-market boom is real, and I think the category keeps growing. But the scoreboard everyone watches, valuation and volume, measures the wrong risk. The one that matters doesn’t trend on a chart. It shows up as a letter from a regulator or a bank. Invert first. Build for the thing that can end you, then go chase the growth.
If this was useful, share it with someone who builds things. And if you want the full toolkit of 50 mental models, you can grab my book, Mental Models: How to Think, Act, and Win, on Amazon right now.
Disclaimer: This newsletter is for informational and educational purposes only. It is not investment, financial, legal, or tax advice, and nothing here is a recommendation or solicitation to buy, sell, or hold any security or to participate in any investment strategy. The regulatory, legal, and banking matters described are based on third-party reporting (Financial Times, Reuters, Bloomberg, and CNBC) as of the publication date, are evolving, and may change; certain characterizations are those of the reporting outlets, and the companies named have disputed some of that framing. Reported valuations and funding discussions are point-in-time figures, some are unconfirmed by the companies, and private-company figures are difficult to verify independently. The author is Chief Product Officer at /mkt and references it here only as an illustrative example of building in a regulated market, not as a solicitation; any securities offering by /mkt is made solely through its official offering materials. Do your own research and consult a licensed professional before making any financial decision. The author may hold positions in companies or sectors mentioned and receives no compensation from any company covered here.
If you want the mental models behind breakdowns like this, my book, Mental Models: How to Think, Act, and Win, is on Amazon now.
This post is for informational and educational purposes only. It is not investment advice, a recommendation, or a solicitation to buy or sell any security. Funding figures, revenue, and valuation are as reported by the company, regulatory filings, and named outlets; the ~$470M valuation is a reported, time-sensitive snapshot and not independently verified. Dhoni's individual investment amount was not disclosed. The /mkt reference is a structural illustration of building in regulated markets and is not an offer or solicitation. Past performance and third-party investment decisions do not indicate future results.
