ESMA warns Polymarket, Kalshi may need EU approval to serve users

Major prediction markets including Polymarket and Kalshi generally lack the approvals needed to offer services to EU users, the European Securities and Markets Authority warned in a report released today, CoinDesk reported. ESMA said marketing and selling event contracts in the EU generally requires EU authorization, but the largest prediction market platforms do not currently hold those approvals. While Polymarket and Kalshi restrict trading in some EU countries, other member states are excluded from those restrictions, ESMA said, adding it was unclear why the services were not restricted across all EU member states. That creates risks tied to unauthorized service provision and potential breaches of existing rules limiting such trading for retail investors, according to the report. ESMA also questioned whether the two platforms can effectively block users who hide their real location through a virtual private network, or VPN. It added event contracts could fall under the EU’s existing binary options ban, MiCA and other crypto regulatory rules, or national gambling laws.