Europe’s top regulator questions Polymarket and Kalshi’s EU access, warns of authorization gaps
The European Securities and Markets Authority (ESMA) has issued a warning regarding the unauthorized operation of prediction market platforms like Polymarket and Kalshi within the EU. The regulator expressed concerns over the lack of proper authorization for event contracts and the potential for these platforms to bypass retail trading restrictions.
Why it matters
This highlights a growing regulatory crackdown on decentralized prediction markets as authorities struggle to classify these assets under existing financial or gambling frameworks.
“The marketing and sale of event contracts in the EU generally requires an EU authorisation, which the largest prediction market platforms currently do not hold,” the regulator said in a risk report released on Thursday.
Prediction markets let users trade contracts on future events, ranging from elections and sports to cryptocurrency prices and economic outcomes. Contracts typically pay a fixed amount if a specified outcome occurs and nothing otherwise.
Both platforms prohibit trading from some EU countries but leave others off their restricted lists, ESMA said.
“It is unclear why all EU Member States are not included in the list of restricted jurisdictions,” it wrote, citing risks of unauthorized services and breaches of existing retail trading restrictions. It also questioned whether the platforms can effectively enforce bans on virtual private networks (VPNs) that can be used to conceal users’ locations.
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