Political betting causes trouble! Spain orders the shutdown of Polymarket and Kalshi, as the prediction market regulatory storm continues to escalate

Spain has determined that the two major prediction market giants offering political betting are illegal gambling, ordering a comprehensive platform access ban, with global regulatory crackdowns on unlicensed prediction markets continuing to intensify.

Spain strikes hard, prediction market giants face blocking crisis

Recently, Spanish regulators launched a surprise attack on the rapidly emerging prediction markets, targeting the industry's two giants, Polymarket and Kalshi. The Spanish Ministry of Social Rights, Consumer Affairs, and the 2030 Agenda, through the Directorate General for Gambling Regulation (DGOJ), issued a preventive measure, requiring internet service providers to fully block access to these two platforms within the next 7 to 10 days. This sanctioning action was prompted by the authorities' inability to directly contact these companies through their known overseas addresses, ultimately opting to publish the sanctions in the official national gazette on Tuesday.

This preventive ban is expected to last 3 to 4 months until the relevant administrative investigation procedures are officially concluded. The sudden law enforcement action carries strong political undertones. Previously, Polymarket launched a prediction market on whether Spanish Prime Minister Pedro Sánchez's government would fall early.

Image source: X/@Polymarket Polymarket launched a prediction market on whether Spanish Prime Minister Pedro Sánchez's government would fall early

Kalshi also shows a 29% chance of Pedro Sánchez stepping down in 2026. These political betting markets have caused a frenzy on Spanish social media, accelerating regulatory intervention.

Image source: Kalshi Kalshi also shows a 29% chance of Pedro Sánchez stepping down in 2026

Gambling disguised as crypto? Regulatory red lines and compliance challenges

Spain’s regulatory framework clearly classifies any activity involving betting on the outcome of unknown future events as gambling. DGOJ has firmly stated that even if platforms adopt blockchain technology or crypto assets, it cannot change the fundamental nature of offering gambling products. To operate legally within Spain, platforms must obtain specific administrative licenses.

Authorities emphasize that unlicensed operators severely lack the technical and regulatory safeguards mandated by Spanish law. This includes basic user identity verification, controls to prevent minors from accessing, and protections for self-excluded or banned participants.

For a long time, prediction market platforms have tended to package themselves as financial derivatives or information aggregation tools, claiming to facilitate price discovery and forecasting efficiency. In the eyes of many governments, platforms that lack consumer protections and allow users to speculate on sensitive events like elections and wars have crossed the red line of unlicensed gambling.

Global crackdown intensifies, multiple countries issue bans

Spain’s actions reflect a tightening global regulatory trend against prediction markets. This is the second major enforcement move in Europe after Portugal blocked Polymarket in January this year due to a surge in presidential election betting. Looking further afield, this crackdown is sweeping across multiple jurisdictions worldwide.

Earlier this week, Indonesia’s Ministry of Communications and Digital Affairs fully banned Polymarket for illegal online gambling, after the platform opened a bet on whether Indonesian President Prabowo Subianto would resign early. Prior to that, Brazil’s central bank ordered the blocking of 27 prediction market platforms, including Polymarket and Kalshi, in April. Argentina and India also issued nationwide bans, viewing these as illegal online money games.

• Related news: Indonesia bans Polymarket! Presidential term betting crosses the red line, Taiwan also blocks prediction markets over local elections

A giant worth over $10 billion, U.S. authorities’ stance becomes a focal point

Despite bans from various countries, the capital scale of prediction markets remains enormous and hard to ignore. Recent data shows that Kalshi and Polymarket’s trading volumes over the past 30 days reached $5.9 billion and $3.8 billion respectively, accounting for nearly 88% of the industry’s top market share. Along with these staggering trading volumes, the valuations of both companies have soared; it is rumored that Polymarket is seeking a valuation of up to $15 billion, while Kalshi’s latest funding round valued it at $22 billion.

As the main bases for these giants, U.S. regulators’ attitudes are particularly critical. The Chairman of the U.S. Commodity Futures Trading Commission (CFTC), Michael Selig, insists that the agency has exclusive jurisdiction over prediction markets, even initiating lawsuits against state-level authorities that challenge this stance.

U.S. President Donald Trump recently publicly praised prediction markets and supported the CFTC’s exclusive authority. Congressional oversight pressure is also increasing, with House Oversight Committee Chairman James Comer announcing an investigation into these platforms, citing concerns over suspicious internal trading activities ahead of potential U.S. military actions against Iran.

• Related news: U.S. House investigates two major prediction markets! Insider trading and overseas user evasion of U.S. regulations become focal points