The European Union consults on how to regulate prediction markets
The European Commission has launched a public consultation regarding a potential revision of the European regulation on crypto-assets. The core of the new discussion is how to frame prediction market platforms, globally led by Kalshi and Polymarket, within the continental regulatory framework. The specific question the body posed to the sector is whether these products should fall under the MiFID financial regulation or the MiCA crypto-asset regulation.
Brussels' move comes amidst an increasingly heated debate. A few weeks ago, Spain ordered the blocking of both platforms until it is determined whether they infringe gambling regulations by operating without the corresponding administrative authorization. The prediction market industry expanded strongly after the 2024 US presidential elections and opened a global discussion about its legal nature.
The regulatory conflict is structural. These platforms allow betting on future events in a binary format and, unlike traditional sportsbooks, users bet against each other, without an odds set by the operator. On this basis, firms argue that they offer an investment product and not a game of chance. The discussion involves three possible categories: games of chance, financial instruments, or digital assets.
Today in Europe, there is no common answer. Each country applies its own interpretation, and gambling regulation remains a national competence. MiCA and MiFID regulations, however, have continental scope, which makes it attractive for platforms to operate under either of them. Sources close to the negotiations indicate that merely including the topic in the crypto consultation sends a signal about the direction the Commission might take.
For Latin America, the European decision serves as a key reference. Brazil has already issued Resolution 5.298 of the National Monetary Council, which addressed the treatment of Polymarket and Kalshi, and other countries in the region are closely following the case before defining their own stance. If Europe ends up framing prediction markets under the crypto umbrella, Latin American regulators will have an additional argument to differentiate this universe from traditional sports betting and build specific rules.
Tags: European Union, Brussels, prediction markets, Polymarket, Kalshi, crypto regulation, LatAm regulation