Spain’s Consumer Rights Ministry temporarily blocked access to prediction market operators Kalshi and Polymarket while it investigates their lack of gambling licenses.
Key Takeaways
- Spain’s temporary ban of Kalshi and Polymarket could last up to four months while regulators investigate their alleged breach of the country’s gambling regulations.
- U.S.-regulated prediction markets are facing more scrutiny outside the country.
- Other countries, including Indonesia and India, have begun to ban prediction markets for alleged illegal gambling.
Kalshi and Polymarket are under investigation by Spain’s gambling regulators, according to Reuters, for allegedly violating local rules and lacking required administrative licenses. In a statement issued Tuesday, Spain’s Consumer Rights Ministry said its gambling watchdog would be conducting the months-long probe. Kalshi and Polymarket will be under a temporary countrywide ban until the investigation is complete.
Prediction markets claim U.S. federal regulations absolve them from complying with U.S. state laws and licensing. States and tribal nations dispute that claim. Currently, there are more than a dozen court cases within the U.S., debating the appropriate jurisdiction and regulations pertaining to prediction markets. It’s unlikely, however, those arguments have any legal relevance outside the U.S.
Many countries view prediction market contracts as gambling. For example, prediction market sporting event contracts can feature match outcomes, props, and parlays, just like sportsbooks. As a result, unlicensed prediction markets are construed as illegal gambling by some countries.
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Bans in other countries
Some recent prediction market news highlights the challenges for operators outside the U.S. In April, India advised internet service providers to block access to Polymarket and some other prediction market websites. This month, India’s residents were no longer able access the websites, which are classified as prohibited online gambling under local law.
Just days after Polymarket accepted bets on the early ouster of Indonesian President Prabowo Subianto, Indonesia blocked the site. Subianto has been under pressure, most recently due to his plan to tighten the rules governing commodity exports.
Indonesian ministry official Alexander Sabar issued a statement on Friday, saying Polymarket was an online gambling platform and its products “contain betting and speculation over events that are inconclusive,” which violates Indonesian law.
A Polymarket spokesperson responded to Indonesia’s ban, stating, “We welcome the opportunity to collaborate with Indonesia on a path forward that supports responsible innovation, transparency and user protection in prediction markets.”
Spain isn’t the only European country at odds with prediction markets. Earlier this year, France reaffirmed its position that prediction markets were prohibited under national law. The Netherlands has banned the use of prediction markets, threatening Polymarket with fines up to €840,000. Meanwhile, Belgium blocked Polymarket in February after the company failed to respond to the country’s gambling regulator.
