How the EU, UK, and Canada Are Responding to Kalshi and Polymarket

Kalshi and Polymarket operate under US federal derivatives licenses, but neither holds a comparable domestic authorization anywhere in the European Union, the United Kingdom, or Canada. Regulators in all three jurisdictions issued statements on the companies within roughly six weeks of each other in the summer of 2026, and each reached a different practical conclusion about what that gap means.

The underlying question every regulator is answering is the same one US courts keep litigating over preemption: whether a contract that is a CFTC-regulated derivative in the United States is also, simultaneously, a security, a gambling product, or something else entirely once it crosses a border where the CFTC has no jurisdiction at all.

The European Securities and Markets Authority's Risk Monitor 2/2026, published September 11, 2026, said marketing and selling event contracts in the EU generally requires an EU authorization that neither Kalshi nor Polymarket holds. ESMA questioned the effectiveness of both companies' geo-blocking of EU users, noting it is partial and circumventable with a VPN.

ESMA separately flagged manipulation and insider-trading risk on pseudonymous, blockchain-based platforms such as Polymarket, saying operator controls remain largely reactive. The publication carries no enforcement authority on its own, but it puts EU securities regulators on record with the same access-control critique already made against the companies by regulators in North America.

The FCA's position, restated in its 2026 Perimeter Issues update, is that every financially focused prediction-market product it has assessed falls within the binary-options category that has been banned for UK retail consumers since 2019. That ban is not aimed at Kalshi or Polymarket by name, but it covers the products both companies sell.

The Times reported on September 7, 2026 that the FCA has separately held exploratory talks with trading platforms about easing that ban, driven in part by evidence that UK consumers already access Kalshi and Polymarket from abroad, commonly through a VPN. No policy change has been proposed and the FCA has not confirmed the talks; the public ban stands, and offering a UK-authorized version of these products would still require both an FCA permission for the financial-contract element and a Gambling Commission license for the event element.

Canada has taken the most specific position of the three. The Canadian Securities Administrators and the Canadian Investment Regulatory Organization said in a joint statement on August 27, 2026 that event contracts based on sports and entertainment outcomes should not be regulated as securities or derivatives at all, and that CIRO does not consider it appropriate to approve a dealer member to trade them.

What CIRO dealer members can offer is narrower: event contracts tied to economic, environmental, or financial indicators, traded and cleared through US-regulated exchanges and clearinghouses. Only two CIRO dealers currently hold that approval, Wealthsimple and Interactive Brokers Canada, and Wealthsimple's Predict platform, launched in partnership with Kalshi in June 2026, hosts roughly 4,000 of Kalshi's contracts within those approved categories only.

Where Canada has actually enforced rather than just clarified, the result was a formal securities sanction. The Ontario Securities Commission settled with Polymarket's operators, Blockratize Inc. and Adventure One QSS Inc., in April 2025 over unregistered offers of binary options to Ontario residents between 2020 and 2023, a violation of the province's binary-options prohibition.

The settlement bars the respondents from trading securities or derivatives, or acquiring securities, in Ontario for two years, and requires Polymarket's terms of use to state that Ontario residents may not trade on the platform. Outside Ontario, Polymarket's status in the rest of Canada remains less defined, and residents in other provinces can still reach the platform, commonly through a VPN, the same access gap regulators in the EU and UK have separately flagged.

None of the three jurisdictions has granted Kalshi or Polymarket a comparable license to the one either company holds with the CFTC, and none treats a US federal derivatives registration as sufficient on its own to operate abroad. What differs is enforcement posture: the EU has only flagged the gap, Canada has both carved out a narrow permitted lane and enforced against the unpermitted one, and the UK is the only jurisdiction where the public position and the private conversation are visibly pulling in different directions.

For anyone tracking these companies' international exposure, the more reliable signal is not a company's own claim about which markets it serves, but whether a named regulator, ESMA, the FCA, or CSA and CIRO jointly, has taken a specific position on the product category rather than the brand. Each of the three positions above is category-specific, and a change to one does not imply a parallel change in either of the other two.