Haberler

The European Securities Markets Regulator (ESMA) has taken a closer look at two major betting platforms for the outcome of events — Polymarket and Kalshi. The agency believes that both companies have not issued licenses that are needed in the EU to implement such contracts. There is no direct ban, but there is a legal uncertainty that affects both users and the platforms themselves. ESMA emphasizes that it is not the name of the product that is important, but its economic essence and compliance with European financial standards.

The regulator also noticed inconsistencies in geographical restrictions. Both platforms block access for only a part of the EU countries. For example, Polymarket does not work for Germany, France, Italy, and the Netherlands, while Kalshi lists Belgium, Bulgaria, Hungary, Ireland, Italy, Poland, Portugal, and France. ESMA wonders: if the site operates on the territory of the Union, then it is logical either to comply with the general rules or to block access in all states. The absence of a country on the Kalshi list does not mean that its residents trade freely — the company requires compliance with local laws. Plus, the restrictions don't always apply to other functions, which complicates enforcement.

ESMA doubts the effectiveness of the bans. Polymarket formally does not allow circumvention of blockages via VPN, but this rule does not guarantee its compliance. In France, restrictions did not prevent access: according to ANJ, about 205,000 unique users visited the site in June. On July 16, ANJ ordered Polymarket to be blocked at the provider level. In Spain, they also started proceedings and ordered the websites to be closed until the procedure was completed.

In the July 3 clarification, ESMA described three modes. If the contract is a financial instrument, MiFID II applies. If it is a non—financial type of token, it is MiCA. If the bet is based on national gambling laws that may operate in parallel with financial ones. A fixed payment for a correct forecast does not in itself make a contract a financial instrument — it is important which asset or indicator the outcome is associated with.

If a contract is recognized as a financial instrument and is subject to binary options restrictions, it cannot be advertised or sold to retail customers. These bans are in effect at the EU country level and have replaced the 2018 ESMA interim measures. Regulators look at the device of the product, not the name. Interest or rewards on deposited funds do not change the binary nature of the contract, as the payout depends on the event. Even working only with professionals requires a MiFID II license if the platform offers financial instruments.

In addition to licensing, ESMA has highlighted the risks for participants. On blockchain platforms like Polymarket, weak identity verification and the possibility of multiple accounts make it difficult to identify insider transactions. The report mentions the case of Gannon's serviceman Ken Van Dyke, who, according to investigators, used private data about the capture of Nicolas Maduro and earned more than 400 thousand dollars. The site stated that it had noticed suspicious trading, notified the US Department of Justice and cooperated with it. The soldier denies the guilt.

Another risk is interference with the data on which the outcome depends. In April, two Polymarket accounts earned $37,000 betting on the temperature at Charles de Gaulle Airport. The payments were related to abnormal sensor readings. Météo-France filed a complaint, and on May 4, the Paris prosecutor's office opened an investigation. There are also problems with determining the results: ambiguous conditions, opaque procedures and delayed payments create a risk of losses.

At the same time, ESMA recognizes the benefits of prediction markets — quotes show participants' expectations about events. Therefore, we are not talking about a complete ban, but about bringing the work in line with EU standards. Companies still want to work in Europe. Kalshi co-founder Luana Lopez Lara spoke in July about negotiations with regulators and expansion plans. On September 9, Polymarket joined the Blockchain for Europe Association, and its legal director Neil Kumar declared his willingness to openly interact with European lawmakers.