ESMA Says the Biggest Prediction Platforms Lack EU Authorisation

Europe's markets regulator has put a name to a gap. In its second risk report of the year, the European Securities and Markets Authority said that selling event contracts in the EU generally requires an EU authorisation, and that the largest prediction market platforms do not hold one. Polymarket and Kalshi are the two it names. The report attaches no deadline and announces no enforcement action against either. It also asks why the two block users in some member states and not in others.

"The marketing and sale of event contracts in the EU generally requires an EU authorisation, which the largest prediction market platforms currently do not hold," the report said.

One contract, three rulebooks

Which rulebook applies decides nearly everything else, and ESMA sets out three. Where a contract pays out on a binary yes-or-no basis and is tied to a financial instrument, it is a derivative under MiFID II, the EU's markets directive, and falls inside the bloc's standing ban on selling binary options to retail investors. Where it runs on a distributed ledger and is not a financial instrument, MiCA governs it. Where neither applies, national gambling law does.

The distinction is not academic. Cryptopolitan reports that the EU prohibition on insider dealing bites only in the first case, a point that appears in that outlet alone. CryptoBriefing dates an earlier ESMA clarification of the derivative question to 3 July, and no other account of the report carries that date. The document itself could not be reached from this desk, so every figure below comes from outlets reading it.

Partial blocks are the part ESMA questions

Both platforms already restrict users in parts of the EU. Neither restricts all of it. ESMA asks why the coverage stops where it does, and whether the blocks hold against a VPN, the ordinary tool for making traffic appear to come from another country. Four separate accounts carry that passage in much the same terms.

Which countries have acted is less settled. CoinDesk reports that France ordered internet providers to block Polymarket in July, and lists Switzerland, Poland, Singapore, Belgium, Portugal, Spain and Brazil as having restricted access before that. Cryptopolitan gives much the same set and adds a temporary Spanish ban in May. CryptoBriefing's list names the Netherlands, the Czech Republic and Romania, which the other two omit, and leaves out Switzerland, Poland, Singapore and Brazil. None of the three shows a source. They do not reconcile.

The volume is elsewhere

ESMA's own framing is that prediction markets have gained less traction in the EU than in the United States, and the figures reported from the document point the same way. crypto.news, alone among the accounts, puts Polymarket's fourth-quarter 2025 volume at roughly $12 billion and Kalshi's at $8.8 billion for the same period. The same outlet reports sports as 73% of Kalshi's activity and crypto markets as about 15% of Polymarket's mix. Those shares rest on one source.

Detection is the risk ESMA spends most words on. Pseudonymous accounts make insider dealing, wash trading and coordinated manipulation harder to spot, the report said, because there is often no verified identity behind a winning position.

What the report stops short of

No account says either platform is under investigation, and none names a national authority acting on the document. Product-intervention powers sit with member-state regulators, and ESMA does not ask any of them to use one here. The same regulator has been willing to set a date before, when it gave crypto firms a July stop for trading without MiCA approval. It gave prediction platforms none.

CryptoBriefing goes further, reporting that no licensed prediction-market operation exists anywhere in the EU and that MiFID II authorisation would take more than a year and structural change at the applicant. Both claims appear in that outlet alone. Its description of a 450-million-person market now closed to the two platforms also sits badly against ESMA's own finding that the blocks cover some member states and not others, and we could not establish which reading the report supports. The open question is which supervisor moves first, and under which of the three rulebooks.