Kalshi and Polymarket U.S. Financial Classification Triggers International Market Exits

Kalshi and Polymarket depend on the Commodity Futures Trading Commission treating prediction markets as financial assets. The classification shields the New York-based firms from state gambling laws and taxes inside the United States. It supplies no cover against foreign statutes that treat the same products as gambling.

Valuations have climbed from below $1 billion in early 2025 to $22 billion for Kalshi and $15 billion for Polymarket, with fresh funding rounds in progress. Both companies now confront an international slump. They have pulled back from China, India, Brazil and Nigeria after sanctions threats. As reported by Sportico, the number of people Kalshi restricts outside the U.S. exceeds the population it serves.

Regulatory Resistance in Foreign Jurisdictions

Most governments classify prediction markets as gambling. Pierre Lindh, managing director at NEXT.io, stated that there aren’t really that many rays of sunshine from an international perspective. Gambling licensing is not the path Kalshi and Polymarket want to take. Kalshi once announced ambitious overseas plans, including a claim it would launch in China. Those efforts have largely disappeared. Polymarket is lobbying European and U.K. officials to treat it as a financial exchange but has changed no minds.

Enforcement actions illustrate the hazard. Polymarket and its partner paid more than $200,000 in an April 2025 settlement with the Ontario Securities Commission for violating a local ban. Australia ordered internet providers to block Polymarket. Brazil forced Kalshi offline in April. Finance minister Dario Durigan said the product carried the potentially very destructive features of gambling. The risk is clear: continued insistence on a single U.S.-style label invites exclusion from major populations.

Where Licensed Competitors Gain Ground

Operators prepared to meet local gambling rules are positioned to advance. Ireland-based Matchbook holds betting licenses in the U.K. and Mexico and is applying for CFTC approval in the U.S. Ronan McDonagh, Matchbook CEO, said he sees that as a massive advantage for us. Bruin Capital-backed WagerWire secured approval in Gibraltar and is seeking licenses in Mexico and the U.K. Zach Doctor, Wire Markets CEO, said the Gibraltar approval gets us into the front of the line.

McDonagh added that you can only go so long bullying your way into other people’s worlds. These firms carry lower expectations for total global conquest and can adjust to regulatory demands that Kalshi and Polymarket resist. The contrast shows the cost of a uniform classification strategy when regulators abroad refuse to adopt it.

The pattern suggests prediction market growth abroad will favor participants who treat licensing as a commercial necessity rather than an admission. Kalshi and Polymarket must decide whether their U.S. valuation model can survive without meaningful access to the world’s largest consumer bases.

Reporting: Sportico

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