Global Crackdown on Prediction Markets: Why Countries Are Restricting Polymarket and Kalshi (2026 Analysis)

Prediction markets have rapidly evolved from niche crypto-native experiments into multi-billion-dollar financial platforms. Two names dominate this space-Polymarket and Kalshi-both of which allow users to trade on the probability of real-world events, ranging from elections and economic indicators to sports outcomes.

However, in 2025–2026, this fast-growing industry has entered a period of intense global regulatory pushback. More than 10 jurisdictions have now restricted or blocked access to one or both platforms, citing gambling laws, lack of licensing, and concerns over consumer protection.

What Are Prediction Markets and Why Are They Controversial?

Prediction markets are platforms where users buy and sell contracts based on the outcome of future events. If a prediction is correct, the contract pays out; if not, it expires worthless.

Platforms like Polymarket and Kalshi argue they function similarly to financial derivatives markets-aggregating information and producing real-time probability pricing. In theory, this makes them useful for forecasting political elections, macroeconomic trends, and global events.

However, most regulators see them differently. Authorities in multiple countries classify these contracts as online gambling products, because users are effectively staking money on uncertain outcomes.

This classification is the central reason behind the wave of global restrictions.

Why Governments Are Cracking Down in 2026

Across jurisdictions, regulators repeatedly converge on three core concerns:

1. Gambling Classification Without Licensing

Most countries require gambling operators to hold strict licenses. Regulators argue that prediction markets meet the definition of gambling because users risk money on uncertain events.

2. Lack of Consumer Protections

Authorities cite insufficient safeguards for:

• Minors
• Self-excluded gamblers
• Problem gambling prevention tools

3. Political and Market Manipulation Risks

Event markets tied to elections or sports raise concerns about manipulation, misinformation, and speculative distortion of real-world outcomes.

Even when platforms use blockchain infrastructure or financial terminology, regulators largely reject the “financial market” framing.

Countries That Have Restricted or Banned Polymarket and Kalshi

Below is a consolidated overview of jurisdictions that have taken direct action against prediction markets.

Europe: Strong Regulatory Push Against Event Betting

Spain

Spain has taken one of the most aggressive positions in 2026, ordering internet service providers to block access to both platforms while disciplinary proceedings continue. The government classifies prediction markets as unlicensed gambling.

Portugal

Portugal blocked Polymarket after a surge in election-related trading activity. The country prohibits betting on political outcomes, making enforcement effectively permanent under current law.

Hungary

Hungary issued a full ban through its gambling authority, citing illegal betting operations.

France

France enforces a nationwide restriction that prevents users from opening positions or depositing funds on prediction platforms.

Belgium

Belgium’s gambling regulator has placed Polymarket on its blacklist for operating without authorization.

Netherlands

Dutch authorities ruled that prediction markets fall under unlicensed gambling activity, triggering enforcement actions.

Germany

Germany allows limited exposure but restricts trading activity. Polymarket blocks certain functions, while Kalshi fully restricts German users.

Italy

Italy applies partial restrictions. Users may view markets but cannot trade or fund accounts.

Switzerland

Switzerland enforces compliance under lottery and betting laws, effectively blocking unauthorized prediction platforms.

Poland

Poland allows users to close positions but restricts new trading activity, reflecting strict licensing rules.

Ukraine

Ukraine has fully blocked Polymarket, citing unlicensed gambling operations with no legal category for prediction markets.

Asia-Pacific: Expanding Regulatory Barriers

China

China blocks access as part of its broader restrictions on online gambling and cryptocurrency-related platforms.

Japan

Japan applies restrictions under its financial and gambling regulatory frameworks.

Singapore, Thailand, and Australia

These countries restrict or block access under gambling enforcement regimes targeting unlicensed offshore betting operators.

Indonesia

Indonesia blocked Polymarket following concerns over politically sensitive event contracts, including predictions involving government leadership outcomes.

Latin America: Rapid Enforcement Growth

Brazil

Brazil blocked both Polymarket and Kalshi as part of a wider crackdown on unlicensed derivatives and betting platforms. Regulators classified event-based contracts as non-compliant financial instruments.

Argentina

Argentina ordered ISPs and app stores to block Polymarket, ruling it an unlicensed gambling service.

Sanctioned Regions vs Regulatory Bans

Countries such as Iran, North Korea, Cuba, Syria, Russia, and Belarus are not necessarily banning prediction markets through gambling regulation. Instead, access is restricted primarily due to international sanctions compliance, particularly under U.S.-led financial restrictions.

This distinction is important: these are not regulatory gambling bans, but sanctions-based access limitations.

United States: A Split Legal System

The U.S. presents a unique contradiction in the global regulatory landscape.

Federal Level

At the federal level, Kalshi operates under oversight from the Commodity Futures Trading Commission (CFTC) as a regulated exchange. Polymarket re-entered the U.S. market through a compliance restructuring involving licensed infrastructure.

State-Level Conflict

Despite federal approval, several states have taken action:

• Nevada has filed legal complaints
• Tennessee issued shutdown orders
• Massachusetts restricted sports-related contracts
• Minnesota passed legislation banning prediction platforms
• Multiple states are considering similar laws

This creates a fragmented system where prediction markets may be legal federally but restricted locally.

Why Sports and Elections Are the Core Issue

The biggest driver of regulatory concern is not abstract financial forecasting—it is sports and political markets.

Sports betting contracts, particularly around global events like the FIFA World Cup, generate the highest trading volume on both platforms. Similarly, political markets—especially elections—raise concerns about manipulation and misinformation.

Regulators argue these categories resemble traditional gambling more than financial instruments.

Market Growth vs Regulatory Pressure

Despite restrictions, prediction markets have experienced explosive growth:

• Combined trading volumes in the tens of billions annually
• Rapid expansion in crypto-native user bases
• Institutional attention and investment inflows

At the same time, enforcement actions are accelerating, creating a global “push-pull” dynamic:

• Expansion in open jurisdictions
• Blocking in regulated markets

This tension defines the current state of the industry.

Why Prediction Markets Lack a Global Legal Category

A key structural issue is the absence of a dedicated regulatory framework for prediction markets outside the United States.

Most jurisdictions are forced to fit them into existing categories:

• Gambling laws
• Financial derivatives regulations
• Online betting rules

Because none of these frameworks perfectly match prediction markets, regulators tend to default to gambling classification, which triggers strict licensing requirements or outright bans.

The Future: Regulation or Fragmentation?

The trajectory of prediction markets now depends on two competing forces:

1. Regulatory Convergence

If governments develop a specific legal category for event-based contracts, platforms like Polymarket and Kalshi could operate more broadly under standardized rules.

2. Continued Fragmentation

If current trends continue, prediction markets may remain legal in some regions but heavily restricted or banned in others, limiting global scalability.

Conclusion

The global response to prediction markets in 2026 reflects a broader regulatory struggle to define what these platforms actually are: financial forecasting tools or gambling products.

With more than 10 countries already imposing restrictions on Polymarket and Kalshi, the industry is entering a critical phase.

Whether prediction markets evolve into a regulated financial category or remain confined by gambling laws will determine the future of one of the fastest-growing sectors in digital finance.

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