EU Regulator Flags Insider Trading Risk in Prediction Markets

The European Securities and Markets Authority has raised fresh concerns about prediction markets, saying the products may be vulnerable to insider trading and uneven access controls across the European Union.

In remarks tied to the sector, ESMA questioned why platforms such as Kalshi and Polymarket block users in some EU jurisdictions but not others. The regulator also noted that virtual private networks can circumvent those restrictions, limiting the effectiveness of geographic controls.

The comments add to scrutiny around a fast-growing corner of crypto-linked trading that allows users to speculate on the outcome of events. While proponents argue prediction markets offer price discovery and real-time sentiment, regulators have increasingly focused on market integrity, consumer protection and compliance risks.

For operators, the issue is not only whether they can enforce country-level restrictions, but whether their products create conditions where nonpublic information can influence trading. That concern could shape how European authorities assess licensing, access rules and surveillance standards for event-based markets.

The warning also arrives as regulators across Europe continue to examine the broader crypto market structure. Even as risk appetite remains elevated, policy scrutiny is intensifying around platforms that blend speculative trading, derivatives-like exposure and cross-border access.