Spain Bans Polymarket and Kalshi for Operating Without Licenses
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
prediction-marketsregulation
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Spain’s Directorate General for the Regulation of Gambling (DGOJ) announced on 26 May 2026 that it had blocked access to prediction market platforms Polymarket and Kalshi. The regulatory action was taken due to the platforms operating within the Spanish market without the required gambling licenses. The order mandates internet service providers to enforce the ban, effectively cutting off Spanish residents from the services. This enforcement reflects a hardening stance against unauthorized prediction markets in the European Union.
The Spanish ban follows a pattern of increased regulatory scrutiny on the模糊 boundary between financial speculation and gambling. In January 2025, the UK Gambling Commission issued warnings to several prediction markets concerning their legal status. The European Securities and Markets Authority is currently drafting a continent-wide opinion on the classification of prediction markets, expected by Q3 2026. This creates a pressurized environment for national regulators to assert jurisdiction.
The global regulatory landscape for crypto and prediction markets is actively shifting. The Markets in Crypto-Assets (MiCA) regulation fully applies across the EU in December 2026, creating a domino effect for ancillary services. National regulators are preemptively clarifying their positions to avoid legal grey areas. Spain’s action is a direct response to this impending EU-wide framework.
The immediate catalyst was a review of non-licensed online gambling operators conducted by the DGOJ in Q1 2026. Polymarket and Kalshi were identified as offering games of chance to Spanish users without proper authorization. The regulator concluded that event-based contracts without a clear, non-recreational purpose fall under gambling law. This interpretation diverges from how the platforms position themselves as information aggregation tools.
Spain represents a market of approximately 47 million people, a small but significant segment for global prediction platforms. The global prediction market industry was valued at $1.2 billion in 2025, with an estimated annual growth rate of 9%. Polymarket facilitated over $80 million in wagers on political and current events in the first quarter of 2026. Kalshi, which is regulated by the US CFTC, saw its user base grow by 45% year-over-year.
| Metric | Before Ban (Est. Q1 2026) | After Ban (Projected Q3 2026) |
|---|---|---|
| Spanish User Base (Polymarket) | ~85,000 | 0 (Blocked) |
| Monthly Trading Volume from Spain | ~$4.5M | $0 |
Comparatively, traditional Spanish betting operators like Codere SA, which holds a license, reported a 6% increase in online revenue last quarter. The ban directly shifts regulatory risk for prediction markets in Europe higher. Italy’s regulator issued a similar ban against a different prediction platform in November 2025, affecting an estimated 60,000 users.
The primary second-order effect is a potential rerating of regulatory risk for companies operating in adjacent crypto and fintech sectors. Decentralized prediction markets like Polymarket face greater existential threats from geo-blocking than centralized, licensed entities. This may accelerate a trend of platforms seeking formal regulatory status, potentially benefiting established, licensed betting operators. Flutter Entertainment (FLTR.L) and Betsson AB (BETSB.ST) could see marginal benefits as speculative activity is funneled toward regulated venues.
A key limitation of this analysis is the niche size of the directly affected market. The direct financial impact on Polymarket and Kalshi is minimal relative to their global operations. The greater impact is symbolic, setting a precedent that other EU nations may emulate. The flow of capital and user activity is likely to migrate to decentralized alternatives or VPN usage, rather than ceasing entirely.
Positioning data from futures markets shows a slight increase in volatility for crypto-related stocks following the announcement. Traders are monitoring for similar regulatory announcements from France and Germany. The ban creates a short-term negative sentiment overlay for the broader decentralized finance (DeFi) sector, as it demonstrates the ease with which national authorities can restrict access.
The next critical catalyst is the ESMA opinion on prediction markets, due by 30 September 2026. This document will provide a harmonized EU stance, potentially triggering a wave of coordinated national actions. A harsh opinion could lead to bans across the bloc, while a more lenient classification could force Spain to reconsider its position.
Monitor regulatory filings from Kalshi and other platforms with the Spanish DGOJ. A license application would signal a strategic pivot to compliance over confrontation. The outcome of Spain’s ongoing transposition of the MiCA regulation into national law, expected by Q4 2026, will also be crucial. It will clarify if crypto-asset service providers can legally offer prediction market products.
Key levels to watch are the total value locked (TVL) in decentralized prediction markets on chains like Polygon, which Polymarket uses. A sustained drop below $25 million TVL would indicate significant user attrition from European actions. Conversely, a rise would suggest successful migration to censorship-resistant protocols.
Prediction markets allow users to trade contracts based on the outcome of real-world events, such as elections or economic data releases, with prices representing collective probability. Sports betting is typically focused on athletic contests and governed strictly by gambling law. The legal distinction often hinges on whether the activity is considered a game of skill (information-driven trading) or chance, a classification that varies significantly by jurisdiction and is at the core of Spain's action.
While a Virtual Private Network (VPN) can technically circumvent IP-based blocks, their use to access banned financial or gambling services often violates the platforms' terms of service. If detected, users risk having their accounts and funds frozen. using a VPN for this purpose may breach Spanish law, potentially resulting in penalties for the user, making it a legally and financially risky option.
The US approach is fragmented but generally more defined. Kalshi operates legally under a designated contract market license from the Commodity Futures Trading Commission (CFTC). Polymarket previously faced regulatory action from the CFTC and now restricts US users to non-financial event markets. Spain’s blanket ban under gambling law is a more absolute approach than the US model of specific licensure for certain event contract types.
Spain's ban establishes a strict gambling-law precedent for prediction markets that other EU regulators may follow.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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