The rise of prediction markets has transformed the landscape of speculative trading, with platforms like Polymarket and Kalshi recording over $37 billion (€31.5 billion) in wagers in 2025. These markets allow users to bet on future events, providing a real-time gauge of public sentiment. Despite their growing acceptance in other regions, EU regulators remain skeptical, imposing bans in several member states.
Prediction markets have transitioned from a niche online activity to a significant component of the financial ecosystem. By placing bets on outcomes such as election results and corporate earnings, users can assess probabilities based on collective judgment. For instance, if a contract is priced at $0.50, it indicates a 50% perceived probability of an event occurring. This innovative approach has garnered attention, particularly following notable events like the 2024 US presidential election and the 2025 German snap election, where these platforms provided predictions that often rivaled traditional polling methods.
Rising Investments and Market Dynamics
The financial sector’s enthusiasm for prediction markets is evident. Recently, Kalshi secured $1 billion (€850 million) in Series E funding, elevating its valuation to $11 billion (€9.4 billion). Similarly, Polymarket received a strategic investment from the Intercontinental Exchange (ICE), valued at $8 billion (€6.8 billion). This influx of capital has sparked a “gold rush” mentality among investors.
During a recent earnings call, Terrence Duffy, CEO of CME Group, emphasized the market’s legitimacy, stating that prediction markets are “a legitimate domain of speculation and information aggregation that our clients are demanding.” Such endorsements highlight the increasing recognition of these platforms within the institutional investment community.
The integration of prediction markets into mainstream media further underscores their relevance. In early December, CNN and CNBC announced partnerships with Kalshi to incorporate live prediction data into their broadcasts. This shift illustrates a growing acceptance of prediction markets as a credible source of information alongside traditional polling.
Regulatory Challenges and Ethical Concerns
Despite their success, prediction markets face significant regulatory hurdles in the European Union. The French National Gaming Authority initiated a crackdown in late 2024 by banning Polymarket, ruling its operations as unlicensed gambling. Other countries, including Belgium, Poland, and Italy, have followed suit, complicating the landscape for prediction markets within the EU.
The Romanian National Gambling Office also blacklisted Polymarket after it facilitated bets on the 2025 Romanian presidential election, which recorded a trading volume exceeding $600 million. Officials stated that any monetary bet on future results constitutes gambling that requires licensing.
Critics raise ethical concerns regarding the potential for prediction markets to blur the line between forecasting and gambling. Some argue this trend leads to “hyper-commodification,” where every aspect of social life becomes subject to market forces. The anonymity of users presents additional risks, as seen in a recent controversy involving a trader nicknamed “AlphaRaccoon,” who reportedly won a significant sum by leveraging insider knowledge related to Google’s search rankings.
Such incidents highlight the need for robust regulatory frameworks to ensure the integrity and reliability of prediction markets. As the EU prepares for the implementation of the Markets in Crypto-Assets (MiCA) regulation by July 2026, the future of these platforms rests on establishing clear guidelines. The European Securities and Markets Authority has indicated that strict market abuse regimes will apply, emphasizing the necessity for oversight as these markets continue to evolve.
With public interest in prediction markets escalating, the EU faces a pivotal decision: embrace this burgeoning sector or impose further restrictions. As 2026 approaches, the implications of these choices will resonate across the financial landscape, shaping how events are forecasted and traded in real-time.
