Spain Bans Polymarket and Kalshi: What It Means for Prediction Markets

TLDR

• Spain temporarily banned Polymarket and Kalshi for operating without gambling licences
• The ban is expected to last three to four months while regulators investigate
• Spain’s gambling watchdog says the platforms lack identity checks and protections for minors
• Prediction markets have grown into a multi-billion-dollar industry, with volumes projected to hit $1 trillion by 2030
• Over 100,000 accounts lost at least $1,000 on Polymarket, with 67% of profits going to just 0.1% of accounts

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Spain has temporarily blocked two major prediction market platforms, Polymarket and Kalshi, for operating without the required gambling licences. The ban was announced in the official state gazette on Tuesday, May 26.

Spain’s Consumer Rights Ministry said its gambling watchdog opened a formal probe into both U.S.-based companies. The investigation is expected to take three to four months.

Regulators say the platforms lacked key consumer protections. These include identity verification systems, controls to block minors, and tools to restrict users who have self-excluded from gambling.

Spain classifies prediction markets as a form of gambling when money is placed on uncertain outcomes. This puts them under the same rules as other betting operators in the country.

Prediction markets let users buy and sell stakes on the outcome of future events. Prices move to reflect the perceived probability of each outcome. Topics range from elections and sports to interest rates and crypto prices.

A Fast-Growing Industry Under Pressure

The platforms went from niche internet products to mainstream finance tools after the 2024 U.S. election cycle. Market volumes are projected to reach $1 trillion by 2030, according to analytics firm Morning Consult.

In the U.S., about one in four men aged 18 to 24 say they have used a prediction market or gambling app in the past six months. A Bloomberg analysis found more than 100,000 accounts lost at least $1,000 on Polymarket alone.

The Wall Street Journal reported that 67% of profits on Polymarket go to just 0.1% of accounts. Close to half a billion dollars reportedly went to fewer than 2,000 accounts.

Jonathan Cohen of the American Institute for Boys and Men described the mindset drawing young men to these platforms as “economic nihilism.” He says some users feel that speculative markets offer a faster path to wealth than traditional investing.

European Regulators Tighten Their Grip

Spain is not alone. Minnesota became the first U.S. state to ban prediction markets. Across Europe, regulators are moving more aggressively against platforms they see as blurring the lines between investing and gambling.

Fintech companies, crypto platforms and digital trading apps are all facing tighter scrutiny. Licensing demands and compliance costs are rising.

Ben Fielding, CEO of AI infrastructure provider Gensyn, told Moneywise that prediction markets tend to push trading on major events to drive fees. He says this encourages users to copy popular trades without having better information.

In the U.S., prediction markets are currently regulated as commodity futures trading, not gambling. Platforms charge small fees on each transaction.

YouTube personality Logan Paul has a partnership with Polymarket and has promoted the platform on social media. Critics say influencers are downplaying the financial risks involved.

Spain’s ban is temporary, but it signals a wider shift. Governments across Europe appear less willing to let lightly regulated platforms expand into mainstream financial life.

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