Spain’s ministry of consumer rights has blocked access to Polymarket and Kalshi while it investigates whether the leading prediction market sites are violating Spanish law by operating without a gambling licence.
On Tuesday the ministry said it had launched disciplinary proceedings against the two platforms, which allow users to bet on everything from the weather to political events, amid allegations that they lacked the “necessary administrative authorisation” to operate in Spain. The two sites would be blocked domestically until the investigation is concluded, it said in a statement, which added: “The process of reaching a final decision is expected to take between three and four months.”
The Spanish regulator, the Dirección General de Ordenación del Juego (DGOJ), has opened sanctioning proceedings against both US-based operators. The ministry said it had attempted to notify Polymarket and Kalshi before blocking them but its efforts had “proved unsuccessful”.
The Legal Case in Spain
Spanish officials cast their decision firmly within the country’s gambling framework. “In Spain, in line with other European jurisdictions, prediction markets are considered gambling when bets are placed on uncertain future outcomes,” the ministry said. “Therefore, operating them in Spain requires obtaining a specific administrative licence.”
To obtain this licence, operators must comply with a series of safeguards, such as identity verification systems and mechanisms to bar access by children as well as people who have self-excluded or who are banned from gambling, the ministry added. The legal classification means that any platform offering contracts on future events – whether political, sporting or geopolitical – must meet the same standards as traditional betting operators.
A spokesperson for Polymarket said it was committed to engaging constructively with authorities in every jurisdiction. “We welcome the opportunity to collaborate with Spain on a path forward that supports responsible innovation, transparency and user protection in prediction markets,” they said. Kalshi did not reply to a request for comment.
European and Global Regulatory Trends
The move by Spanish regulators is the latest point of friction between prediction market sites and gambling watchdogs across Europe. In recent years, as prediction markets have swelled into a multibillion-dollar industry and faced accusations of immorality and insider trading, half a dozen countries across Europe have blocked or limited access to Polymarket, including France, Belgium, the Netherlands and Romania, citing concerns over unlicensed gambling. France banned Polymarket in late 2024; Poland and Italy have also taken action. The Dutch gambling regulator (KSA) previously threatened Polymarket with fines of €420,000 per week for serving Dutch users without a licence.
There is no harmonised EU framework for event contracts, meaning each member state applies its own gambling or financial rules. Some jurisdictions are exploring regulation rather than prohibition: Gibraltar and Malta are actively exploring regulation for prediction markets, and Gibraltar licensed its first prediction market operator earlier this year.
Beyond Europe, the crackdown has intensified. India’s Ministry of Electronics and IT issued a formal blocking order against Polymarket on May 21, 2026, with a similar order for Kalshi reportedly prepared. India reclassified prediction markets as “money games” under online gaming rules effective May 1, 2026. Brazil blocked more than two dozen prediction market platforms earlier this year, and Indonesia has also banned Polymarket. As of March 2026, Polymarket reported over 30 countries where its access is restricted or blocked.
US Legal Battles
In the United States, the regulatory landscape is equally contested. Minnesota became the first US state to sign off on a law banning prediction market sites from operating in its jurisdiction this month. The Trump administration responded by suing the state, accusing it of undermining “the federal regulatory regime” in an effort to block the law from taking effect in August. The U.S. Commodity Futures Trading Commission (CFTC) has sued Minnesota, arguing that prediction markets fall under federal oversight and that states cannot regulate them. The CFTC argues that Minnesota’s law turns lawful operators into felons overnight and could harm farmers who use derivatives for risk hedging.
Another 14 US states have introduced legislation intended to regulate the booming industry, according to the National Conference on State Legislators. At least 15 states introduced legislation in 2026, with approaches ranging from full authorisation to outright bans. Some states are focusing on limiting children’s access or prohibiting specific types of markets such as death markets or political markets. The CFTC has also sued several other states – Arizona, Connecticut, Illinois, New York, Wisconsin – over similar attempts to regulate or ban prediction markets, asserting exclusive federal jurisdiction. Federal courts have reached conflicting conclusions, with some rulings favouring the CFTC’s preemption and others upholding state authority. Several cases are heading towards potential Supreme Court review. Notably, Donald Trump Jr. is a strategic advisor for Kalshi and has invested in Polymarket.
Suspicious Trading and National Security Concerns
Scrutiny has steadily mounted over these sites, particularly Polymarket, after it emerged that some users had placed substantial bets before the US-Israeli war in Iran and Washington’s military action in Venezuela. Blockchain analytics firm Bubblemaps flagged suspicious trading activity: nine connected Polymarket accounts allegedly generated over $2.4 million from bets tied to US military actions and geopolitical developments concerning Iran, with a reported 98% win rate across more than 80 bets. These trades coincided with major wartime developments, including US strikes, reports on Iran’s supreme leader, and a ceasefire announcement. One specific account, “Magamyman,” reportedly made over $553,000 from an $87,000 bet on US strikes against Iran placed shortly before public announcement. Calls for investigations into Polymarket have increased in Congress due to such instances.
In the case of Venezuela, a user reportedly made over $400,000 profit on a $32,000 bet predicting the capture of Venezuelan leader Nicolás Maduro, hours before the US operation. That user had joined Polymarket weeks before the trade. A US Special Forces soldier was later arrested and charged, alleged to have had access to classified information related to the operation. Polymarket refused to settle millions of dollars worth of bets on a US invasion of Venezuela, arguing that Maduro’s capture did not qualify as an invasion under their terms – a decision that angered some gamblers who felt the platform was arbitrarily redefining terms and manipulating the market.
Concerns exist that insider trading on prediction markets could have national security implications, as adversaries might use information leaks to plan their strategies.
Polymarket and Kalshi together control nearly 88% of the monthly trading volume across top prediction markets, with combined volumes of approximately $11 billion in the past 30 days – Kalshi at $5.9 billion and Polymarket at $3.8 billion. While the impact of Spain’s ban is considered limited, as Spain is not the largest market for these platforms, users may attempt to use VPNs to circumvent ISP restrictions. The three-to-four-month investigation period may allow for negotiation if the platforms engage with Spanish authorities.
