EU MiCA Prediction Market News: Polymarket and Kalshi Lack EU Approval

EU MiCA Prediction Market News: Polymarket and Kalshi Face EU Scrutiny

Europe's top securities regulator has put the legal footing of the world's largest prediction market platforms under a spotlight. In a risk report published Thursday, the European Securities and Markets Authority said neither Polymarket nor Kalshi currently holds the authorization generally required to sell event contracts to users across the European Union. 

The finding is not a formal enforcement action. Still, it signals growing regulatory pressure on the fast-growing sector, as prediction markets push deeper into mainstream finance on both sides of the Atlantic.

At a Glance

• ESMA says Polymarket and Kalshi generally lack the EU MiCA authorization needed to market event contracts in the bloc.

• Event contracts could fall under MiFID II, MiCA, or national gambling laws depending on structure.

• ESMA questions why the platforms don't restrict all 27 member states and doubts VPN blocking works.

• France, Spain, and other countries have already taken national action against the platforms.

• ESMA separately warns of insider trading risk in prediction markets and wider crypto contagion tied to stretched AI valuations.

• Kalshi launched gold and silver perpetual futures in the US on September 10 after CFTC approval.

Source: ESMA Official X

How EU Rules Could Classify Prediction Market Contracts

The regulatory outcome for any given event contract depends heavily on how it is built. ESMA laid out three possible paths: a contract could count as a financial instrument under the Markets in Financial Instruments Directive II, as a crypto asset under the Markets in Crypto-Assets framework, or as a gambling product governed by rules that differ from one member state to the next. 

The distinction matters because financial instruments that resemble binary options are generally barred from retail marketing and sale under long-standing EU consumer protections.

Why ESMA Questions Geographic Restrictions

Both platforms already block access from some European countries, yet ESMA pointed out that neither excludes all 27 member states. The regulator said it was unclear why the restricted list was incomplete given the authorization gap. 

It also raised doubts about whether geographic blocking can work at all when traders can mask their location with a virtual private network, undermining the reliability of the safeguards currently in place.

Source: ESMA

Prediction Markets Face Growing Scrutiny Across Europe

ESMA's warning follows a string of national crackdowns. France ordered internet providers to cut off access to Polymarket in July, and Spain's consumer authority used DNS-level blocks against both platforms in May over missing gambling licenses. Switzerland, Poland, Belgium, Portugal, and Brazil have imposed restrictions of their own. 

The pattern reflects a fragmented landscape where financial and gambling rules vary sharply by jurisdiction, leaving platforms to navigate a patchwork rather than a single EU standard.

ESMA Warns of Insider Trading and Manipulation Risks

Beyond licensing, ESMA flagged a separate concern: growing institutional interest in prediction markets is colliding with weak monitoring tools. 

The regulator said manipulation and insider trading risks are reaching new levels, and that crypto-based settlement makes wash trading and coordinated manipulation harder to detect. It cited a rising number of incidents as evidence the issue is not theoretical.

Kalshi Expands Beyond Prediction Markets With Gold and Silver Perps

While Europe tightens scrutiny, Kalshi's US business kept expanding. The company received Commodity Futures Trading Commission approval for gold and silver perpetual futures and launched the contracts on September 10, the first non-crypto perpetual product cleared by the agency. 

Kalshi's crypto perpetuals, approved in late May, have since generated roughly $44 billion in notional volume, underscoring how quickly the platform is pushing past its prediction-market roots even as EU regulators question its authorization there.

Source: Wu Blockchain

ESMA Also Warns of Wider Crypto Contagion Risk

The same report warned that heavy borrowing to fund AI infrastructure is inflating technology valuations, and that a sharp correction in tech stocks could spill into crypto markets now more tightly linked to traditional finance through exchange-traded funds and institutional custody. Bitcoin fell roughly 35% in the first half of 2026, and smaller tokens lost as much as 61%, a sign the two markets are increasingly connected.

What ESMA Warning Means for Polymarket and Kalshi Users in Europe

ESMA has not announced a ban, and existing accounts are not directly affected by this report. But the explicit statement that the two largest platforms lack required authorization raises the likelihood of future action, whether from Brussels or individual capitals.

Conclusion

Prediction markets are expanding rapidly on both sides of the Atlantic, with some projections pointing toward $1 trillion in volume by 2030, even as Kalshi pushes into new asset classes like gold and silver perpetuals in the US. 

Yet in Europe, the legal status of these platforms remains far from settled, caught between financial rules, crypto regulation, and gambling law. Until ESMA or individual member states act more decisively, users and the platforms themselves are left operating in a gray zone that could tighten with little warning.

YMYL Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Cryptocurrency and prediction market products carry significant risk, including potential total loss of capital. Regulatory status can change quickly and varies by jurisdiction. Readers should conduct their own research and consult a licensed financial or legal professional before making any decisions related to prediction markets or crypto assets.