Europe's top securities regulator says Polymarket and Kalshi lack the authorization needed to serve EU users. ESMA's risk report says event contracts could fall under binary-options bans, crypto rules, or national gambling law depending on how they're structured, and it follows a string of national blocks already in place across the bloc.
The European Securities and Markets Authority said Polymarket and Kalshi lack the authorization generally required to serve EU users, in a risk report released Thursday. ESMA wrote that marketing and selling event contracts in the EU generally requires a license, "which the largest prediction market platforms currently do not hold."
Restricted lists don't cover every member state
Both platforms block trading from some EU countries but leave others off their restricted lists, and ESMA said it is unclear why all member states are not included in the list of restricted jurisdictions. The regulator also questioned whether either platform can enforce its bans against users who mask their location with a VPN.
Three separate rulebooks could apply
Event contracts tied to a financial instrument count as derivatives under MiFID II, which pulls them into the EU's ban on marketing binary options to retail investors, according to Crypto Briefing. Contracts built on distributed ledger technology that aren't financial instruments can instead fall under the bloc's crypto-asset framework, or count as gambling under national law, the report said.
The warning follows months of national action. Spain's gambling authority issued a precautionary block on both platforms around May 26, and France ordered its internet providers to block Polymarket in July, building on blocks already in place in Switzerland, Poland, Singapore, Belgium, Portugal, Spain and Brazil. There are currently zero licensed prediction market operations anywhere in the EU.
Polymarket settles its contracts in USDC, the stablecoin issued by Circle. Kalshi already holds CFTC approval to offer certain event contracts in the US, but neither status carries weight under EU rules, which are built around licensed, accountable entities rather than the protocol model Polymarket has favored.
Sources: CoinDesk, Crypto Briefing
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