Brussels: The business of predicting the future has rapidly evolved from an online niche into a multibillion-euro industry, with prediction markets now shaping how elections, financial decisions, and major global events are forecast. Yet despite their growing influence and institutional backing, regulators across the European Union remain deeply sceptical.
In 2025, prediction markets emerged as a powerful instrument for aggregating collective judgement, allowing users to trade on the likelihood of real-world outcomes. Two of the sector’s largest platforms, Polymarket and Kalshi, recorded a combined wagering volume exceeding $37 billion (€31.5bn) this year, according to industry data cited in The Block’s 2026 Digital Assets Outlook Report.
The scale of activity reflects a broader shift in how information is priced and consumed. Rather than relying solely on traditional opinion polling or expert forecasts, prediction markets translate expectations into prices, with each trade updating the market’s collective view in real time.
From niche platforms to institutional attention
A prediction market functions much like a financial exchange. Participants buy and sell contracts tied to the outcome of uncertain future events, such as election results, interest-rate decisions, or corporate earnings. These contracts typically settle at $1 if the event occurs and $0 if it does not, meaning the market price represents an implied probability.
The influx of capital has accelerated rapidly. This month, Kalshi raised $1 billion (€850 million) in a Series E funding round, valuing the company at $11 billion (€9.4bn). Polymarket reached a similar milestone in October after securing a strategic investment of up to $2 billion (€1.7bn) from Intercontinental Exchange, which also agreed to distribute Polymarket’s data to institutional investors worldwide.
Established financial institutions have taken note. Terrence Duffy, chief executive of CME Group, described prediction markets as a “legitimate domain of speculation and information aggregation” during a recent earnings call, reflecting growing demand from professional clients.
Beating polls and reshaping media coverage
Prediction markets gained mainstream visibility during the 2024 US presidential election and the 2025 German snap election, where market-based forecasts tracked outcomes in real time and, in some cases, proved as accurate as, or more accurate than, traditional polling.
This perceived reliability has prompted major media outlets to adapt. In recent weeks, CNN and CNBC announced partnerships with Kalshi, integrating live prediction market data into election coverage and economic reporting. Several other outlets have begun referencing market probabilities alongside polls when covering political and policy decisions.
Supporters argue that prediction markets reduce bias by forcing participants to back their beliefs with capital. Critics counter that markets can be distorted by speculation, misinformation, or manipulation.
Rising concerns over manipulation and misuse
As prediction markets expand, so do concerns about their unintended consequences. Critics warn of what they describe as “hyper-commodification”, the transformation of social and political outcomes into tradable assets, blurring the line between forecasting and gambling.
High-profile incidents have amplified these fears. In December, a Polymarket trader known as “AlphaRaccoon” reportedly earned more than $1 million (€850,000) within 24 hours by correctly predicting Google’s 2025 “Year in Search” rankings, triggering allegations of insider access to proprietary data.
In another case, Brian Armstrong, chief executive of Coinbase, demonstrated how easily outcomes could be influenced after deliberately mentioning buzzwords during an earnings call that users had wagered on, instantly driving probabilities to certainty.
For regulators, such incidents highlight risks around insider trading, market abuse, and the erosion of prediction markets’ credibility as neutral forecasting tools.
Europe’s regulatory firewall
While prediction markets continue to grow in the United States, the EU has taken a far more restrictive stance. In late 2024, France’s national gambling authority blocked Polymarket, ruling that its operations constituted unlicensed gambling. Belgium, Poland, and Italy followed with similar bans.
Romania’s National Gambling Office blacklisted the platform in October after it hosted wagers on the country’s 2025 presidential election, citing the principle that betting on future outcomes, regardless of whether payments are made in fiat or crypto, requires licensing.
The regulatory picture across the EU remains fragmented. In some member states, including Germany and Spain, prediction markets remain accessible, but there is no unified EU-wide framework governing their operation.
The pressure is set to increase in 2026 with the full implementation of the EU’s Markets in Crypto-Assets (MiCA) regulation. The European Securities and Markets Authority has made clear that MiCA’s market-abuse rules will apply to crypto-based prediction markets, potentially reshaping or restricting their business models.
As global events continue to be priced in real time, the EU faces a strategic choice: whether to integrate prediction markets into its regulatory system or exclude them altogether.
