The European Securities and Markets Authority warned that major prediction-market platforms including Polymarket and Kalshi generally lack the EU authorization required to market and sell event contracts to users in the bloc. ESMA said the contracts could qualify as financial instruments under MiFID II, fall under the Markets in Crypto-Assets framework when based on distributed ledger technology and not otherwise classified as financial instruments, or be treated as gambling under national law. Binary-payout contracts can also fall under the EU’s retail binary-options restrictions, in force since 2018. Polymarket and Kalshi restrict trading in some EU countries but not others, and ESMA questioned why restrictions do not cover all member states and whether VPN controls can prevent users from concealing their locations. European authorities have imposed or supported blocks on prediction-market websites, including France’s July action against Polymarket. ESMA has separately warned that heavy borrowing for artificial-intelligence investment could amplify a technology sell-off, prompting investors to liquidate liquid, risky assets such as crypto to raise cash.