Spanish users who opened Polymarket or Kalshi this week found the sites unreachable. Spain’s gambling regulator ordered internet providers to block the two prediction-market platforms on the ground that they operate without a gambling license, according to Reuters. The move targets a fast-growing corner of finance where anyone with a credit card can wager on elections, interest-rate decisions, wars and the weather — and where regulators increasingly see a product that fits no existing box.
Polymarket is the largest prediction market in the world. Built on crypto rails, it lets users buy and sell contracts on future events, and its global trading volume surged during the 2024 U.S. presidential election, when traders poured billions of dollars into wagers on the outcome. Kalshi is the regulated American exchange that won a court fight with the Commodity Futures Trading Commission in 2024 to list contracts on which party would control Congress, opening the door for event contracts in the United States. The two platforms serve overlapping purposes through very different structures: one decentralized and global, the other licensed, audited and American.
Spain’s action is the latest in a string of regulatory responses. French authorities investigated Polymarket in 2024 over gambling-law concerns, and the company blocked French users; regulators in other European countries have issued warnings; in the United States, the CFTC has oscillated between allowing and restricting event contracts, and state regulators have taken their own positions. The pattern, analysts said, is predictable: prediction markets grow, governments notice, and the markets’ legal status — gambling, derivatives, or something new — gets decided jurisdiction by jurisdiction.
The Spanish regulator’s core argument is straightforward: platforms that let people bet on future events with money at stake are gambling, and gambling requires a license. The regulator, the Dirección General de Ordenación del Juego, acts under a framework built for casinos, lotteries and sportsbooks, and a prediction market fits the definition of a game of chance in which money is staked. Prediction-market operators argue the opposite: their contracts are information markets, closer to futures exchanges or opinion polls with skin in the game. The distinction matters because gambling licenses are hard to get and tightly regulated, while financial derivatives are regulated by securities and commodities authorities — a different regime entirely.
Behind the legal argument sits a political one. Prediction markets now exert a visible influence on public life. Politicians, journalists and investors watch market odds as real-time signals on elections and policy; a market that moves can move coverage, and coverage can move the market. For governments, the worry is unregulated money shaping perceptions of political outcomes — and, through them, the outcomes themselves. Reuters reported that the Spanish decision reflected official concern about new financial derivatives that fall outside existing rules, people familiar with the matter said.
The accuracy question cuts both ways. Prediction markets have a strong record of forecasting: market odds often beat polls, and Polymarket’s final odds on the 2024 U.S. election were close to the actual result. Defenders argue that public information is an asset worth protecting, and that banning markets removes a useful signal from public life. Regulators counter that accuracy does not cure illegality, and that retail users betting on a smartphone are not analysts — they are customers of an unlicensed bookmaker.
The effect on the companies is uneven. Polymarket routinely blocks users in jurisdictions where it is not permitted, a pattern it followed in France, and it is likely to do the same in Spain rather than fight a long legal battle. Kalshi presents a harder case: it is regulated by the CFTC in the United States, and a Spanish gambling ruling treats one of the most tightly supervised platforms in the industry as an unlicensed casino. Analysts noted the irony, and the lesson: compliance regimes are local, and a platform can be fully legal in one country and fully illegal in another on the same day.
Spain’s neighbors will be watching. Other European Union member states have debated how to treat prediction markets, and a formal blocking order from Madrid gives them a template. The EU’s digital-services rules add another layer, requiring platforms to respond to national authorities’ requests to block illegal content. Prediction-market operators have argued that event contracts are not content but financial instruments, a position that national gambling authorities reject. The conflict is structural, and it is not going to be resolved by a single ruling.
For the prediction-market industry, the response will be a familiar mix: more self-regulation, more licensing applications, more careful geo-blocking, and more legal challenges. Some platforms have begun offering tokenized, non-cash versions of contracts to stay ahead of gambling definitions; others are pursuing licenses in jurisdictions that will have them. None of that changes the core trajectory, analysts said. Prediction markets grew into a global business in the space of a few elections, and the regulatory response is now globalizing just as fast.
The Spanish order shows that prediction markets, whatever they call themselves, are now on the same shelf as gambling in at least one major European capital. Others may follow, and the industry’s next battles will be fought in courts and parliaments rather than on order books. The markets themselves will keep operating where they can — the same week Spain blocked them, traders somewhere were pricing the next election. The question regulators have opened is whether that activity should be legal anywhere at all.
