ESMA warns Polymarket and Kalshi lack EU authorization for event contracts
The European Securities and Markets Authority (ESMA) warned that Polymarket and Kalshi lack EU authorization to offer event contracts to European users. The regulator published its notice on Thursday, September 11. ESMA questioned whether the platforms' geo-blocking measures are sufficient to ensure compliance. The regulator noted that event contracts can be classified as financial instruments under MiFID II. ESMA's statement signals potential compliance hurdles for the CFTC-regulated US platforms seeking to operate in European markets.
ESMA's notice forces Polymarket and Kalshi to treat Europe as a legal minefield rather than a growth market. Both platforms must now choose between costly MiFID II authorization tracks, sharper geo-blocking that sacrifices user volume, or accepting state-by-state enforcement risk across the bloc. France and other countries are already moving to block the platforms independently.
The regulator's pairing of authorization gaps with fraud warnings in the same risk report gives national supervisors political cover to launch probes beyond ESMA's central guidance. European banking partner will price both legal exclusion and market integrity risk into deal terms. The UK may become the platforms' only European beachhead, concentrating regulatory exposure in a single jurisdiction.