Source: Decrypt
Published by source: Sep 11, 2026, 12:06 PM UTC
The European Securities and Markets Authority (ESMA) reported that prediction markets are "rife with inside trading," citing specific incidents involving large profits from advance knowledge and alleged tampering. ESMA noted that platform responses are mostly reactive and that prediction markets have not gained significant traction in the EU due to regulatory barriers.
The European Securities and Markets Authority (ESMA) dedicated a chapter in its risk monitor to prediction markets, highlighting concerns about insider trading. ESMA listed three episodes: wallets making $1.2 million before February's strike on Iran, with Bubblemaps later tracing nine linked accounts to $2.4 million in Iran bets that won 98% of the time; a U.S. Army master sergeant charged over $400,000 in Polymarket profits related to the capture of Venezuelan president Nicolás Maduro; and suspected tampering with weather sensors used to settle Polymarket contracts, which led Météo-France to file a police complaint. ESMA criticized platforms for being largely reactive, acting only after profits are taken. The regulator attributed the limited uptake of prediction markets in the EU to regulatory restrictions, noting that event contracts may be classified as financial instruments, derivatives, or gambling, depending on national law. ESMA also observed that Kalshi and Polymarket restrict users in some EU countries but not all, and questioned the effectiveness of VPN bans. Malta is the only EU country drafting a specific framework. ESMA's data, which stops at November 2025 for Kalshi and January 2026 for Polymarket, showed quarterly volumes of $8.8 billion and $12 billion, respectively, with sports dominating Kalshi's volume and Polymarket splitting across politics, sports, and crypto.