The European Securities and Markets Authority has warned that major prediction platforms Polymarket and Kalshi lack the authorization required to serve European Union users. Under ESMA guidelines, event contracts tied to financial instruments are classified as derivatives, subjecting them to the EU's 2018 retail binary options ban. While platforms like Polymarket and Kalshi expand their footprint through major sports partnerships and aggressive ad campaigns, European regulators are tightening restrictions, with Spain and France already implementing website and ISP-level blocks.
ESMA authorization warning
- ▪The European Securities and Markets Authority released a risk report on September 10, 2026, highlighting insider trading risks, market exploitation, and unauthorized status as active investor protection concerns for prediction markets.
- ▪The European Securities and Markets Authority warned that major prediction markets, including Polymarket and Kalshi, lack the authorization required to serve European Union users.
- ▪The European Securities and Markets Authority questioned why Polymarket and Kalshi exclude some European Union countries from their restricted lists while leaving others off, and questioned if they can effectively enforce virtual private network bans.
Prediction market regulatory classification
- ▪Under the European Securities and Markets Authority classification, event contracts qualifying as derivatives fall under the European Union's retail binary options ban, which has been in effect since 2018.
- ▪Tokenized event contracts that do not reference financial instruments and do not qualify as MiFID II instruments may fall under national gambling laws or the Markets in Crypto-Assets framework.
- ▪The European Securities and Markets Authority issued a statement on July 3, 2026, clarifying that event contracts with binary payouts tied to financial instruments qualify as derivatives under MiFID II.
EU member state enforcement actions
- ▪France's gambling regulator, the ANJ, ordered internet service providers to block access to Polymarket around July 17, 2026.
- ▪Spain's gambling authority, the DGOJ, issued a precautionary block on the websites of Polymarket and Kalshi around May 26, 2026.
- ▪Nine European gambling regulators issued a joint warning targeting unlicensed prediction market platforms on June 19, 2026, with countries including Belgium, Portugal, and Spain applying additional restrictions.
Prediction market advertising spend
- ▪Prediction markets accounted for approximately $50 million, or 18%, of the national linear TV sports betting ad spend through August 2026.
- ▪Prediction market brands Kalshi and Polymarket contributed to a 39% year-over-year increase in national linear TV sports betting ad spend, which neared $275 million through August 2026.
Sports league prediction partnerships
- ▪Polymarket has established official sports league partnerships with Major League Baseball and Major League Soccer, alongside individual team partnerships such as the New York Yankees.
- ▪The National Football League has remained opposed to prediction markets, maintaining alignment exclusively with traditional online sportsbooks.
- ▪Kalshi and Polymarket signed a partnership deal with the National Hockey League in 2025 and have engaged in ongoing talks with the National Basketball Association.
AI bubble crypto contagion
- ▪The European Securities and Markets Authority stated that a technology stock sell-off could trigger crypto asset liquidations, as digital assets are now more closely tied to traditional finance.
- ▪The European Securities and Markets Authority warned that heavy artificial intelligence spending by technology companies is inflating valuations, raising the risk of an AI bubble.
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