EU regulator warns Polymarket, Kalshi may lack proper authorization

EU regulator warns — The European Union’s top securities regulator has questioned the legal status of prediction market platforms Polymarket and Kalshi in the bloc, warning that their event contracts could violate existing financial rules.

The European Securities and Markets Authority (ESMA) issued a statement highlighting potential “authorization gaps” for such platforms. The regulator noted that contracts for difference (CFDs) and binary options on these markets may fall under existing EU-wide bans.

ESMA clarified that event contracts offered by these platforms could be regulated under several existing frameworks. These include the Markets in Crypto-Assets Regulation (MiCA), if the contracts are deemed to be crypto-assets, or under national gambling laws.

The statement serves as a direct warning to platforms like Polymarket, which is built on Ethereum, and Kalshi. It signals increased regulatory scrutiny for prediction markets that allow users to bet on real-world events using cryptocurrency or traditional payment methods.