The European Securities and Markets Authority (ESMA) has raised concerns about prediction-market platforms such as Polymarket and Kalshi offering services to users in the European Union without the necessary regulatory authorizations.

ESMA said prediction markets present investor-protection and market-integrity risks, including potential insider trading and market manipulation. The regulator added that the rapidly growing platforms require continued monitoring.

The authority has previously warned that event contracts offered by prediction markets could fall under the European Union’s rules on binary options if they function as financial instruments. Firms providing investment services involving those products may therefore require authorization under the bloc’s Markets in Financial Instruments Directive II (MiFID II) framework. The classification of each product remains central to determining which authorization or national rules may apply.

Some prediction-market products could also fall under national gambling rules or, in certain circumstances, the EU’s crypto-asset framework.

In a statement shared on X, ESMA said:

“Although available data mainly reflect global market activity and do not permit an assessment of @europeanunion retail participation, prediction markets do not appear to have gained significant traction in the EU compared with the US,” says @ESMAComms . “This may be explained by… pic.twitter.com/qRUFEOdQh9 — BitKE (@BitcoinKE) September 11, 2026

Polymarket and Kalshi remain largely unauthorized across the EU. However, both platforms allow access in some European jurisdictions while restricting users in others. European users can also attempt to bypass geographic restrictions through tools such as virtual private networks.

Polymarket has said it is expanding its presence in Europe and has joined Brussels-based trade group Blockchain for Europe. The company’s chief legal officer said Polymarket was committed to engaging with EU policymakers.

Kalshi, which has overtaken Polymarket in trading volume, has also said it is in talks with international regulators about expanding overseas.

The regulatory questions arise as prediction markets expand beyond political betting into sports, commodities and financial markets. Kalshi reported more than $400 million in monthly commodity trading volume in August, highlighting the sector’s rapid growth. ESMA’s continued monitoring, along with the platforms’ discussions with regulators, will help determine how these products are treated as their offerings expand.

Source: BitcoinKE