Serving EU users without necessary licenses, ESMA warns Polymarket and Kalshi

Odaily News — The European Securities and Markets Authority (ESMA) has issued a risk report stating that major prediction market platforms such as Polymarket and Kalshi currently do not hold the authorizations typically required to offer event contracts to users in the EU. ESMA noted that the regulatory classification of event contracts depends on the specific product and they may be deemed financial instruments, crypto-assets subject to the MiCA framework, or subject to member state gambling regulations; if classified as financial instruments, they would typically be treated as derivatives and could be subject to the EU's retail restrictions on binary options.

ESMA questioned that Polymarket and Kalshi only restrict certain member states, and that VPNs may bypass geographic restrictions. In July of this year, France already required internet service providers to block Polymarket. ESMA also warned that if AI investment returns fall short of expectations or a sell-off in tech stocks occurs, large investors may sell highly liquid risk assets, including crypto-assets, to raise cash; data shows that Bitcoin fell 35% in the first half of 2026, while U.S. spot Bitcoin ETFs saw outflows exceeding $5.5 billion during the same period.