Europe’s top regulator questions Polymarket, Kalshi’s EU access

The European Securities and Markets Authority just drew a line in the sand for prediction markets, and it runs right through the business models of Polymarket and Kalshi. On July 3, ESMA issued a statement clarifying that event contracts with binary payouts tied to financial instruments under MiFID II qualify as derivatives. That single classification pulls these contracts into the EU’s retail binary options ban, a prohibition that has been in effect since 2018. The regulatory squeeze tightens ESMA’s move doesn’t just affect retail traders. Even platforms serving professional clients will need to secure MiFID II authorization to operate legally in the EU. For Polymarket and Kalshi, neither of which holds such authorization, this amounts to a “closed” sign hanging on the door of a 450-million-person market. Spain’s gambling authority, the DGOJ, issued a precautionary block on both Polymarket and Kalshi’s websites around May 26. France followed with an even more aggressive measure: ISP-level blocking of Polymarket access following a decision by the ANJ, France’s gambling regulator, around July 17. Nine European gambling regulators issued a joint warning on June 19, targeting unlicens...