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- ESMA warned that prediction markets like Polymarket and Kalshi lack required EU authorizations and questioned the effectiveness of their country-specific geo-blocking measures.
- European regulators highlighted significant risks of insider trading and market manipulation, with countries like France and Spain already taking action to block the platforms,.
The European Securities and Markets Authority (ESMA) said Polymarket and Kalshi have not obtained the authorizations typically required to sell event-outcome contracts in the European Union, while also questioning whether the platforms’ country-by-country trading blocks are working in practice.
That matters because the two U.S.-linked prediction market operators are facing broader scrutiny over how event contracts should be treated in Europe, where regulators may classify them under MiFID II, MiCA, or national gambling law depending on the product and jurisdiction.
ESMA said it was “unclear why not all EU member states are included on the list of restricted jurisdictions,” pointing to inconsistencies in the countries each platform says it blocks.
According to the report, Polymarket restricts trading for users in Germany, France, Italy, the Netherlands, and other countries. Kalshi’s member agreement lists Belgium, Bulgaria, Hungary, Ireland, Italy, Poland, Portugal, and France among prohibited jurisdictions.
The regulator also said such restrictions may not be effective in practice, noting that VPN-blocking rules do not guarantee compliance.
France and Spain have already taken action
ESMA’s comments come after enforcement steps in Spain and France.
Spain’s regulator opened proceedings against Polymarket and Kalshi in May over alleged operations without the required authorization and ordered the sites blocked pending the outcome, according to the fact pack.
In France, the National Gambling Authority (ANJ) said users bypassed Polymarket’s block and that the site drew about 205,000 unique visitors from France in June. On July 16, ANJ ordered internet providers to block Polymarket.
The report also outlined risks regulators see in event-contract markets, including insider trading, manipulation, ambiguous resolution rules, non-transparent settlement procedures, and delayed payouts.
ESMA cited the case of Gannon Ken Van Dyke, whom U.S. prosecutors say used non-public information to make more than $400,000 on Polymarket. It also referenced suspected manipulation tied to Paris Charles de Gaulle Airport temperature bets that reportedly earned two accounts $37,000.
What comes next for prediction market operators
ESMA did not announce a new pan-EU enforcement action in the material cited here, but it laid out the main legal frameworks that could apply to event contracts in Europe and signaled continued concern about cross-border access.
That leaves several open questions, including how specific event-contract products will be classified across EU jurisdictions and whether Polymarket or Kalshi seek additional authorizations.
Polymarket has signaled it wants to engage with European policymakers. The company joined Blockchain for Europe on Sept. 9, and general counsel Neil Kumar said it was “ready to engage early and openly with European lawmakers.”
ESMA also noted that prediction markets can help track expectations around political, economic, and social events, even as regulators weigh the compliance and consumer-protection risks.
Source: As reported by Ado5jt4lotra.
