The European Securities and Markets Authority reported in September that major prediction market platforms, including Polymarket and Kalshi, lack required authorization to offer event contract services within the European Union.
ESMA specifically questioned the effectiveness of geographic restrictions. While some platforms block access in specific EU member states, users can access markets in others and potentially circumvent controls using virtual private networks.
The core issue is regulatory classification. Event contracts could fall under multiple frameworks: as financial instruments subject to MiFID II authorization and binary options restrictions, under individual member states' gambling laws, or under the EU's Markets in Crypto-Assets framework. This ambiguity leaves the authorization pathway unclear across the bloc.
ESMA identified concrete investor protection risks: potential insider trading, market manipulation, and insufficient monitoring of rapidly growing platforms.
Prediction markets have achieved minimal traction in the EU compared to the United States—a disparity ESMA attributes partly to the lack of clear regulatory authorization. Polymarket has joined Blockchain for Europe, a Brussels-based trade group, and its chief legal officer committed to engaging EU policymakers on regulatory frameworks. Kalshi has pursued global regulatory discussions and reported more than $400 million in monthly commodity trading volume in August, surpassing Polymarket in overall trading volume.
National approaches diverge sharply. France's gambling regulator previously labeled Polymarket illegal and ordered internet service providers to block access. This fragmented enforcement underscores the structural problem: event contract classification varies by jurisdiction, making EU-wide authorization nearly impossible under current rules.
