Europe’s top securities regulator says Polymarket and Kalshi do not hold the EU authorization generally required to sell event contracts in the bloc, leaving both prediction market platforms exposed across a market of 450 million people.
The warning appears in a risk report the European Securities and Markets Authority published on September 10. “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 the report.
Under the EU framework governing investment services, MiFID II, contracts that qualify as financial instruments are treated like derivatives. Where that applies, they fall under existing national measures, in place since 2018, that prohibit offering binary options to retail investors. ESMA’s report lays out three possible buckets for an event contract: a financial instrument under securities rules, a crypto asset under MiCA if it is tokenized and not a financial instrument, or a gambling product under national law.
The regulator also pressed the platforms on their own geo-blocks. Both restrict trading from some EU countries but leave others off their restricted lists, and the report asks why. “It is unclear why all EU Member States are not included in the list of restricted jurisdictions,” ESMA wrote. It also questioned whether the platforms can actually enforce their bans on VPNs used to conceal a user’s location.
The report caps a summer of national moves against the platforms. Spain’s gambling regulator ordered a precautionary block on both sites around late May, and France ordered internet providers to block Polymarket in July, after Belgium, Portugal and Spain had already restricted access.
The market gap is total for now: no licensed prediction market operation exists anywhere in the EU. Securing MiFID II authorization is a lengthy process, one that could take well over a year, which would put either platform’s European future on hold for that long.
