The European securities regulator says major prediction markets do not have permission to operate in the EU

ESMA noted that event contracts may fall under different regulatory regimes depending on their characteristics. Some may qualify as financial instruments, while blockchain-based contracts that do not qualify as financial instruments may fall under MiCA. Others may be treated as gambling products under national law.

ESMA stressed that the major prediction markets do not have all the necessary authorizations to market and sell event contracts. The regulator also noted the ineffectiveness of operating restrictions in some EU countries imposed by Polymarket and Kalshi. Users bypass them with VPNs. ESMA is also concerned about insider trading and manipulation of outcomes on the platforms.