ESMA Flags Authorization Gaps for Polymarket and Kalshi in the EU

The European Securities and Markets Authority (ESMA) has raised concerns about whether prediction-market platforms, including Polymarket and Kalshi, can offer services to European Union users without the required regulatory authorizations.

According to reporting by BitKE, ESMA said prediction markets raise investor-protection and market-integrity concerns, including risks tied to insider trading and market manipulation. The regulator described the platforms as rapidly growing and said they warrant continued monitoring.

ESMA has previously indicated that event contracts offered by prediction markets could fall under the EU's rules on binary options if they operate as financial instruments. Firms providing investment services involving such products may need authorization under the bloc's MiFID II framework. CoinDesk reported that these contracts could also fall under existing EU binary-options bans, the crypto-asset framework MiCA, or national gambling laws, depending on how they function.