ESMA questions legality of Polymarket and Kalshi in Europe
The European Securities and Markets Authority (ESMA) has raised questions about the legality of prediction market platforms Polymarket and Kalshi operating in Europe. ESMA flagged growing risks as these platforms have grown into multi-billion-dollar businesses. Traditional exchanges including Eurex, Euronext, and CME Group (CME) are also active in the space. The scrutiny comes as European regulators tighten oversight across emerging financial and technology sectors.
ESMA's challenge forces both platforms to abandon any near-term European expansion plans. Polymarket and Kalshi must now choose between costly MiFID II authorization tracks that take years, sharper geo-blocking that sacrifices user volume, or accepting state-by-state enforcement risk across the bloc. France is already moving to block platforms independently.
The regulator pairs this legal front with fraud warnings in the same risk report, giving national supervisors political cover to launch their own probes. European banking partners will price both legal exclusion and market integrity risk into any deal terms. Each new jurisdiction that adopts ESMA's skepticism shrinks the stable ground where either platform can operate.