Spain Blocks Prediction Markets Kalshi, Polymarket for Potential Gambling Law Violations

Spain is taking the precautionary measure of blocking prediction market platforms Kalshi and Polymarket as it investigates potential violations of its gambling regulations. 

The disciplinary order was handed down by the Directorate General for Gambling Regulation (DGOJ) and was put into place after regulators could not reach the firms at their respective foreign addresses, according to a press release. 

“The Ministry of Social Rights, Consumer Affairs, and Agenda 2030 has opened disciplinary proceedings against Polymarket and Kalshi, two prediction platforms where betting takes place, for a possible violation of gambling regulations, as they are allegedly operating in Spain without the required administrative authorization,” the translated release states.

The platforms are expected to remain blocked for three to four months as the disciplinary proceedings take place.

“The DGOJ (Spanish Directorate General for Gambling Regulation) reminds the public that in Spain, in line with other European jurisdictions, prediction markets are considered gambling when bets are placed on uncertain future outcomes,” the Ministry of Consumer Affairs wrote. “Therefore, operating them in Spain requires obtaining a specific administrative license.” 

The European nation joins a growing list of countries that have blocked or outright banned the growing prediction market platforms. Last week, Indonesia instituted a ban against Polymarket, noting that use of the platform constituted gambling. Other Asian countries, like Thailand and India, have made moves towards blocking the platforms. 

As a result of the firms lacking the proper regulations, Spain’s DGOJ noted that they are incapable of providing guarantees to “identity verification systems, mechanisms to control access to minors and people who are self-excluded or prohibited from gambling, or the supervision standards necessary for the protection of users.”

Polymarket and Kalshi have surged in popularity this year, generating more than $5 billion and $13.7 billion in monthly trading volumes respectively in May, according to data from Dune. 

The pair have also seen their valuations jump, with Polymarket reportedly seeking a $15 billion valuation while Kalshi most recently raised funds at a $22 billion valuation. 

While scrutiny has risen abroad, it also continues to bubble in the United States, particularly amid concerns of insider trading allegations—like in the case of a group of wallets that netted around $2.4 million in profits on markets related to the Iran War. In April, a U.S. soldier was charged with placing Polymarket bets using confidential information, allegedly netting over $400,000 from predictions around the removal of Venezuelan President Nicolás Maduro.

Last week, House Republicans opened an investigation into both firms, with one congressman saying “that Congressional action may be necessary.”