ESMA says Polymarket, Kalshi lack authorization for event contracts in the EU

The European Securities and Markets Authority (ESMA) said in its latest risk report that major prediction market platforms including Polymarket and Kalshi do not currently hold the authorization required to offer event contract services in the European Union. The regulator also noted that some platforms only restrict users in certain EU member states, rather than across the bloc. ESMA questioned how effective those geo-blocking arrangements are, including measures aimed at stopping access through VPNs. In the report, ESMA said event contracts could be classified in different ways depending on their structure. They may be treated as financial instruments, fall within the scope of the Markets in Crypto-Assets framework, or be subject to gambling laws at the member-state level. ESMA added that if such contracts are deemed financial instruments, their marketing, distribution and sale to retail investors would generally face existing restrictions that apply to binary options.