The prediction market industry has experienced a remarkable surge, reaching a staggering **$37 billion** (€31.5 billion) in wagers placed in 2025. This growth reflects a shift in how people forecast real-world events, turning collective judgment into a tradable commodity. Despite this rapid expansion, **EU regulators** continue to express concerns, resulting in bans across several member states.
A prediction market allows individuals to bet on the likelihood of various outcomes, from election results to corporate earnings. Instead of traditional polling methods, these platforms offer a dynamic environment where the price of bets reflects collective beliefs about future events. For instance, a bet priced at **$0.50** implies a **50% probability** of the event occurring. This real-time updating has led some to argue that prediction markets capture public sentiment more accurately than conventional surveys.
Major players in this burgeoning sector, such as **Polymarket** and **Kalshi**, have made significant strides. According to the **2026 Digital Assets Outlook Report**, these platforms have generated combined volumes exceeding **$37 billion** in 2025. In recent weeks, Kalshi secured a **Series E funding round of $1 billion** (€850 million), valuing the company at **$11 billion** (€9.4 billion). Similarly, Polymarket reached a milestone in October when the **Intercontinental Exchange (ICE)** announced an investment of up to **$2 billion** (€1.7 billion), valuing the platform at **$8 billion** (€6.8 billion). ICE is also set to distribute Polymarket’s data to institutional investors globally.
Despite the increasing interest from financial institutions, EU-based prediction markets have struggled to gain traction. As platforms that function similarly to financial exchanges, users buy and sell binary contracts that pay out **$1** if the event occurs and **$0** if it does not. This structure has attracted attention, particularly following the **2024 US presidential election** and the **2025 German snap election**, where these platforms served as real-time scoreboards, often predicting outcomes as reliably as traditional polling.
The perceived accuracy of prediction markets has prompted media outlets to incorporate their data. Recently, **CNN** partnered with Kalshi to feature live prediction market data in broadcasts, followed closely by **CNBC**. Prior to these partnerships, several news organizations had already begun integrating these forecasts into their reporting on significant events, such as interest rate decisions and legislative votes.
Yet, the growing popularity of prediction markets has not been without controversy. Critics argue that gamifying human outcomes blurs the line between serious forecasting and gambling, leading to a phenomenon termed “hyper-commodification.” This trend may encourage gambling behaviors, create opportunities for insider trading, and incentivize potential manipulation of real-world events.
In a notable incident earlier this month, a Polymarket trader known as “AlphaRaccoon” gained attention after winning **22 out of 23 bets** related to Google’s **2025 Year in Search** rankings. The trader reportedly netted over **$1 million** (€850,000) within 24 hours, leading to accusations of insider trading due to alleged access to proprietary search data. This situation raised significant questions about the integrity of prediction markets, especially considering the anonymity of users, complicating efforts to identify those engaging in unethical practices.
In late October, **Brian Armstrong**, CEO of **Coinbase**, highlighted the risks of manipulation during the company’s third-quarter earnings call. Users on Polymarket and Kalshi had significant financial stakes tied to specific buzzwords he might mention. Armstrong’s intentional pause during the call led to a spike in the implied probability of those terms being discussed, highlighting potential vulnerabilities in prediction markets.
The EU’s regulatory response to prediction markets began in late **2024** when the **French National Gaming Authority** blocked Polymarket, citing unlicensed gambling operations. Subsequent bans were issued in **Belgium**, **Poland**, and **Italy**. The **Romanian National Gambling Office (ONJN)** also blacklisted Polymarket in **October** after substantial trading volume related to the country’s upcoming presidential election exceeded **$600 million**. The ONJN emphasized the need for licensing for any betting activities involving future results.
While several EU member states, such as **Germany** and **Spain**, still permit access to prediction markets, the overall regulatory landscape remains fragmented. As the EU approaches the full implementation of the **Markets in Crypto-Assets (MiCA)** regulation in **2026**, which will affect platforms utilizing blockchain technology, the future of prediction markets within the EU hangs in the balance. By **July 2026**, the grandfathering period for securing a **Crypto-Asset Service Provider** license will conclude, placing further pressure on these platforms.
As the world increasingly engages in real-time pricing of events, the EU faces a critical decision: to embrace this innovative market or enforce stricter bans. The outcome will shape the future of prediction markets and their place in the broader financial landscape.
