In brief
- Polymarket is facing bans in Portugal and Hungary, along with a lawsuit in Nevada and actions in other states.
- The prediction market stands accused in several places of offering unregulated gambling services.
- However, prediction markets operators argue that they are not providing gambling services, but rather event contracts.
Polymarket has kicked off 2026 facing a new slew of regulatory actions from jurisdictions in Europe and the U.S., even as it edges its way back into the American market.
On Friday, both the Hungarian Supervisory Authority for Regulated Activities and the Portuguese Gaming Regulatory Authority issued bans against the prediction market, accusing it of illegal gambling activity.
"The website is not authorized to offer betting in Portugal, and under national law, betting on political events or happenings, whether national or international, is not permitted,” Portuguese regulators told local outlet Rádio Renascença.
The same day, the Nevada Gaming Control Board filed a civil enforcement action against Polymarket, asking the court “for a declaration and injunction to stop Polymarket from offering unlicensed wagering.” Its actions follow a similar one in Tennessee earlier this month, when the state’s sports betting regulator ordered Polymarket, Kalshi, and Crypto.com to shut down their sports prediction markets and refund wagers.
Prediction markets have exploded in popularity over the last two years, particularly ahead of the U.S. presidential election in 2024. The markets, including top players Polymarket and its main competitor, Kalshi, are seeing combined volumes of over $13.5 billion monthly and processing over 43 million transactions, according to a November 2025 report by Dune and Keyrock. (Disclaimer: Decrypt’s parent company Dastan operates prediction market platform Myriad.)
The controversy surrounding them hinges on the claim by prediction markets that they are not gambling platforms. In April, the CEO of Kalshi—which is also facing a class action lawsuit in the Southern District of New York, filed last week, which contends it operates as an “illegal and unlicensed sports book”—Tarek Mansour told Axios that prediction markets offer “events contracts,” not bets.
"I just don't really know what this has to do with gambling. If we are gambling, then I think you're basically calling the entire financial market gambling,” he said at the time, describing the market as “an open financial marketplace” where people trade against each other instead of betting against a sportsbook.
But regulators beg to differ.
Further compounding the issue is that in many places, betting on the outcome of political events is illegal—including in Portugal and also Taiwan, where Polymarket users have been investigated for betting on the outcome of the most recent presidential elections.
Concerns have also been raised about the extent of insider trading on prediction markets. Earlier this month, a Polymarket user made over $436,000 after correctly betting that former Venezuelan President Nicolás Maduro would be removed from power before January 31. The bet was made just hours before U.S. forces removed him, leading to accusations the user had advance knowledge of what was going to happen.
It prompted U.S. Representative Ritchie Torres (D-NY) to draft a bill prohibiting federal employees from using prediction markets when in possession of relevant insider knowledge.
That said, at the Federal level, there has been a thaw in attitudes towards prediction markets in line with Trump’s favorable stance towards crypto. In November, the Commodity Futures Trading Commission approved the return of Polymarket to the U.S. market. It was previously banned and fined $1.4 million in 2022 for regulatory compliance failures.
Kevin de Patoul, CEO of Keyrock, told Decrypt that prediction markets are a fascinating test case for blockchain’s core promise of turning collective intelligence into tradable, verifiable data.
“But they’re also showing us how fragile that can be when incentives or visibility are misaligned,” he said. “It’s evident there’s a need for clearer boundaries between participation, governance, and influence. Markets built on trustless systems still need trusted frameworks if they’re going to inform anything meaningful beyond speculation.”
“The next phase will depend on who can design markets that preserve open access while embedding transparency and compliance by design,” de Patoul added. “That’s how I see prediction markets evolve from entertainment to reliable, institutional-grade signals.”
Whether Polymarket will be allowed back into jurisdictions like Portugal and Hungary is unclear. The ban in Hungary, for instance, is temporary. In a blog, law firm CMS said that in theory, several outcomes remain possible, including the lifting of the temporary block. However, enforcement trends suggest that the authority may ultimately take a firmer position.
“Further regulatory measures may be applied, depending on the authority’s final assessment of Polymarket’s activities,” its Budapest-based lawyers wrote. “The possibility of the block being removed cannot be entirely excluded at this stage.”
Decrypt reached out to Polymarket for comment on the bans, but did not immediately receive a response.