Polymarket and Kalshi banned in Spain: Regulation goes into overdrive

Madrid Strikes Fast and Hard

On May 26, 2026, the General Directorate for Gaming Regulation (DGOJ), part of the Spanish Ministry of Social Rights, opened a disciplinary procedure against Polymarket and Kalshi. This decision follows complaints from local licensed gaming operators who denounced unfair competition from unlicensed foreign platforms. The ban is effective immediately on a precautionary basis for all Spanish users. The procedure is expected to take three to four months.

The position of the Spanish authorities is unequivocal. In Spain, as in most European jurisdictions, predictive markets are classified as gambling when bets are placed on uncertain future events. Their operation requires a specific administrative license, which neither Polymarket nor Kalshi holds for the Spanish territory. This legal qualification is at the heart of the regulatory showdown taking place globally around these decentralized crypto trading platforms.

This ban comes at a time when both platforms had just announced their expansion into crypto perpetual futures. This strategic diversification, intended to strengthen their positioning within the Web3 ecosystem, now faces an increasingly dense regulatory wall. For Spanish users wishing to invest in crypto through these tools, resorting to a traditional exchange remains the only legal alternative available.

A Global Regulatory Framework?

Spain is not an isolated case. It joins a list of over ten countries that have restricted or banned access to these predictive market platforms. France, through the National Gaming Authority (ANJ), paved the way by initiating similar procedures against Polymarket several months earlier. This week, Indonesia also blocked Polymarket, classifying it as illegal online gambling.

The list of countries restricting these platforms is rapidly growing. It now includes Brazil, Taiwan, Thailand, China, Japan, Ukraine, Belgium, Australia, the United Kingdom, and Germany. This international regulatory convergence reflects an emerging consensus: predictive markets operate in a legal gray area that states are progressively seeking to close. The global crypto regulatory trend clearly points towards increased oversight of these activities.

This global movement does not spare the United States. Members of the U.S. Congress have launched an investigation into Kalshi and Polymarket over suspicions of insider trading. This initiative follows reports of suspiciously well-timed bets before U.S. military actions against Iran. The transparent blockchain of these platforms paradoxically facilitates the detection of abnormal behaviors by regulators.

The Business Model of Predictions Under Pressure

The predictive market operates on a simple principle: allowing any user to bet on the outcome of a future event via automated smart contracts. This decentralized mechanism is precisely the crux of the regulatory problem. Authorities struggle to apply their traditional legal frameworks to protocols without a fixed headquarters or identifiable intermediary. The classification as gambling thus becomes the most accessible legal tool of substitution.

For Polymarket and Kalshi, the stakes go beyond the mere Spanish ban. If major European economic powers align with the positions of France and Spain, the entire growth model of these platforms will need to be rethought. Obtaining licenses country by country represents a considerable operational cost, incompatible with the rapid deployment logic inherent to DeFi protocols. This structural tension does not have a simple short-term resolution.

Users face an increasing fragmentation of access based on their jurisdiction. Those wishing to maintain exposure to predictive markets will need to navigate access via VPNs, migrate to more decentralized protocols, or resort to altcoins exposed to this sector. Regulatory pressure mechanically creates a spillover effect towards less visible protocols. A phenomenon well documented in the history of cryptocurrency.

Are Predictive Markets Condemned to Reinvent Themselves?

The central question is no longer whether predictive markets will be regulated, but rather how quickly and with what severity. Polymarket has already begun negotiations with the CFTC to attempt a legal return to the United States. This initiative illustrates the platforms’ awareness: the era of frictionless regulatory expansion is over. Obtaining licenses is becoming a condition for survival, not a strategic option.

The sector is entering a phase of forced consolidation. Platforms with sufficient resources to navigate regulatory complexity will survive and strengthen. Others will gradually be pushed out of developed markets. This pattern is similar to what centralized exchanges like Binance or Coinbase experienced during the major regulatory waves from 2021 to 2023.

For the Web3 ecosystem as a whole, this targeted regulatory pressure sends a clear signal. Protocols operating in legal gray areas are now in the crosshairs of global regulators. The price prediction of tokens associated with these platforms will remain under pressure as long as their legal status is not clarified. The regulatory bear market is far from over for this segment.

Sources:

• iGamingBusiness on X
• CoinMarketCap on X

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