Spain blocks Polymarket and Kalshi amid regulatory probe
The Spanish government has issued an order to block access to prediction market platforms Polymarket and Kalshi while authorities determine if they violate local gambling laws.
The Spanish government has issued an order to block the prediction market platforms Polymarket and Kalshi. The ban is a precautionary measure implemented by the ministry in charge of consumer affairs while an investigation into the legality of these platforms is conducted. The investigation will determine if the platforms violate Spanish gambling laws, as they currently operate without a gambling license.
The probe is expected to conclude within four months and may result in requirements for specific administrative licences. This regulatory move mirrors similar efforts in the United States, where multiple states have attempted to ban or regulate prediction markets. However, the US Commodity Futures Trading Commission (CFTC) is currently suing these states, asserting that it holds sole federal jurisdiction over such platforms.
Minnesota has become the first US state to ban prediction markets, with Governor Tim Walz signing a bill that makes operating or advertising such markets a felony. Rhode Island, Illinois, Arizona, Connecticut, Nevada, and New Jersey have also challenged the legality of prediction markets. The CFTC’s lawsuits argue that state-level bans infringe on federal authority, creating a complex legal landscape for the industry.
The platforms have recently attracted significant attention due to concerns over market integrity. A US soldier was charged with using classified information regarding the capture of Venezuela's Nicolas Maduro to win over $400,000 via gambling platforms. Additionally, an individual in France allegedly used a hairdryer to manipulate a weather sensor to win $34,000 twice on Polymarket, leading to a complaint by Météo France.
Despite these controversies, the financial scale of the industry remains substantial. Kalshi has a recent valuation of $22 billion, and Polymarket has a recent valuation of $15 billion. The outcome of the Spanish investigation remains unknown, as it is still pending completion within the next four months. The long-term regulatory landscape for prediction markets in both Spain and the US is unclear due to ongoing legal and administrative proceedings.
