73% of Kalshi Trading Comes From Sports, ESMA Report Finds

Sports-related markets account for 73% of identified trading activity on Kalshi, according to a new European Securities and Markets Authority analysis of the fast-growing prediction market sector. ESMA also warned that market manipulation and insider trading risks are reaching “new levels” as event-contract platforms expand and become more closely connected with crypto and traditional finance.

The figures appear in ESMA’s second Risk Monitor of 2026, published on September 10. The regulator analysed public Kalshi and Polymarket data as part of a four-page review of prediction markets and their relevance to securities markets.

By Q4 2025, quarterly trading volume had reached approximately $8.8 billion on Kalshi and $12 billion on Polymarket, with ESMA saying growth continued into 2026. The product mix is markedly different between the platforms: sport represents 73% of identified Kalshi activity, while Polymarket’s largest category is politics at 29%, followed by sport at 19% and crypto at 15%.

ESMA Points to Insider Trading and EU Access Risks

ESMA said prediction markets raise both investor-protection and market-integrity concerns. It highlighted the pseudonymous nature of blockchain-based platforms as a factor that can make insider trading, wash trading and coordinated manipulation harder to identify.

The report cited several recent incidents, including newly created wallets that reportedly made $1.2 million before the February US-Israel strikes on Iran became public and a US soldier charged with allegedly using classified information to place prediction-market bets. It also referenced suspected manipulation of weather data used to settle Polymarket contracts.

What It Means for Market Participants

The European regulator also questioned the ability of major platforms to serve EU customers. Event contracts may fall under MiFID II, MiCA or national gambling legislation, depending on their structure. ESMA said their marketing and sale generally require EU authorisation, which the largest prediction-market platforms currently do not hold. Contracts classed as financial instruments may also fall under existing national restrictions on binary options for retail investors.

This builds on ESMA’s July statement reminding firms that existing binary-options measures can apply to event contracts.

What Comes Next

ESMA stopped short of proposing a new regulatory regime. It said prediction markets remain relatively limited within the EU but warrant continued monitoring as institutional participation, crypto integration and global retail activity increase.