The European Securities and Markets Authority said Polymarket and Kalshi generally do not have the approvals required to market and sell event contracts to users in the European Union, raising the prospect of broader scrutiny over how prediction markets operate across the bloc.

According to ESMA, marketing and selling event contracts in the EU typically requires authorization within the bloc, which Polymarket and Kalshi do not currently hold. The regulator said that, despite some restrictions in certain EU countries, other member states are not covered by those limits.

That leaves the two platforms exposed to questions about unauthorized service provision in Europe. ESMA also raised doubts about whether they can reliably prevent access by users who mask their location with virtual private networks, a point that goes to the practical effectiveness of regional restrictions rather than their existence on paper.

The regulatory uncertainty extends beyond simple licensing. ESMA said event contracts could potentially fall under the EU's ban on binary options for retail investors, MiCA, other crypto-related rules, or national gambling laws, depending on how the products are structured and interpreted. The statement stops short of setting out a single legal category that would apply in every case.

The warning adds to a broader compliance challenge for prediction markets operating across borders. One recent example came from Spain, where the gambling regulator moved to temporarily block Polymarket and Kalshi and opened an investigation into whether they were offering prediction-based trading products without the required local gambling license.

Why It Matters

This is a regulatory signal that EU authorities are paying closer attention to prediction markets that sit between derivatives, crypto products, and online betting. For platforms such as Polymarket and Kalshi, the issue is not only whether users can access the service, but which rulebook applies once authorities decide how event contracts should be treated.

The broader significance is market structure. If European regulators push for stricter authorization and tougher geo-blocking standards, offshore venues may face narrower distribution channels in the region, while compliance burdens for similar products could rise across crypto-linked and event-driven trading platforms.