More and more European countries are blocking Polymarket due to legal concerns

The regulatory pressure on crypto platform Polymarket is increasing further in Europe. After previous restrictions in France, Belgium and Poland, among others, Hungary and Portugal have now also taken steps to limit access to the platform.

This increases uncertainty about how so-called prediction markets should be treated legally: as financial markets or as games of chance.

Pressure on Polymarket is increasing in Europe

The Hungarian regulator Szabályozott Tevékenységek Felügyeleti Hatósága (SZTFH) has temporarily blocked Polymarket. According to an official statement, the platform organizes prohibited gambling activities. As long as the investigation is ongoing, the website will remain inaccessible from Hungary. Users who attempt to log in will see a warning from authorities.

The tone has also tightened in Portugal. Portuguese gambling regulator SRIJ has ordered Polymarket to phase out its activities in the country. It is striking that the platform was still technically accessible, which indicates that enforcement there is being implemented in phases.

These steps follow shortly after a similar decision by Ukraine, which last week labeled Polymarket an illegal gambling platform. Previously, France, Switzerland, Belgium, Poland and Singapore, among others, have already implemented blockades. Polymarket has now been blocked in 33 countries.

Financial instrument or gambling platform?

The core of the problem lies in the nature of prediction markets. On Polymarket, users trade contracts linked to real events, such as elections, geopolitical developments or macroeconomic data. The price is determined by supply and demand, not by a bookmaker.

Proponents argue that this is more similar to financial markets than traditional gambling. Critics and regulators mainly see similarities with games of chance without a license. In Europe, the latter interpretation predominates for the time being.

Extra attention after suspicions of inside information

The recent measures did not come out of the blue. Polymarket has been under scrutiny for some time after a striking transaction in early January. Shortly before the arrest of Venezuelan President Nicolás Maduro, a user placed a relatively small bet, which eventually turned into a profit of about $400,000. This led to suspicions of insider trading.

In the United States, legislation is now being drawn up that would prohibit government officials from trading in political prediction markets. This also increases the pressure on the sector.

Growth despite blockages

Remarkably, trade itself hardly seems to suffer from the increasing restrictions. On January 12, the total trading volume in prediction markets reached a record of more than 700 million dollars. Competitor Kalshi accounted for the largest share of this.

This is relevant for the crypto market because prediction markets are increasingly seen as a sentiment indicator. As with Bitcoin, they show how capital moves to alternative markets when traditional systems fail. At the same time, the European approach makes it clear that innovation in crypto is not separate from national regulations.

The coming months will show whether prediction markets can legally reposition themselves as a financial infrastructure, or whether they can be definitively placed in the ‘online gambling’ box.