{"text":[[{"start":9.24,"text":"Prediction markets are “rife with insider trading” and expose investors to serious risks of losses and exploitation by more sophisticated players, according to the EU’s main market watchdog, in a warning that reveals a growing divergence with the US."}],[{"start":24.84,"text":"The European Securities and Markets Authority said in its twice-yearly risk report on Thursday that fast-growing prediction markets, such as Polymarket and Kalshi, raised “a range of investor protection and market integrity concerns” and required “continued monitoring”."}],[{"start":41.08,"text":"Prediction sites have become increasingly popular in the US as a way of betting on a huge range of future events, such as sports games, election results and the price of oil. But European regulations mean they remain prohibited in much of the continent."}],[{"start":55.48,"text":"“To retail investors, prediction platforms offer speculative gambling environments without the investment protection measures typically associated with regulated financial products when accessed through platforms that are not authorised in the EU,” said Esma."}],[{"start":70.16,"text":"“Their gamified structure, emotional dynamics and social media-driven promotion expose inexperienced retail investors to significant risks of financial loss, addictive behaviour and exploitation by more sophisticated traders.”"}],[{"start":84.52,"text":"It said market manipulation and insider trading risks “reach new levels” on prediction markets, in particular ones that have limited identity verification such as Polymarket. “A growing number of incidents illustrates that prediction markets are rife with insider trading,” it said."}],[{"start":100.16,"text":"There are rising concerns about insiders with advanced knowledge of events trading on prediction markets. In April, a US soldier involved in the country’s raid to seize Venezuelan leader Nicolás Maduro was charged with placing Polymarket wagers on the mission, earning him a large profit. Gannon Ken Van Dyke, the soldier, pleaded not guilty to the charges."}],[{"start":122,"text":"The negative assessment of the sector by the EU’s top market watchdog contrasts with the more welcoming approach of US authorities, which have approved the launch of several new financial products based on prediction-style contracts."}],[{"start":134.44,"text":"In Europe, sites such as Polymarket and Kalshi remain largely unauthorised, meaning their sites are prohibited for consumers. But Europeans may still be accessing them by hiding their location with a VPN, and the industry is intensifying its lobbying in a bid to ease restrictions."}],[{"start":151.44,"text":"Esma said Malta was exploring a regulatory framework for prediction markets, adding that Polymarket and Kalshi both say on their websites they prohibit users in “some but not all EU states” from placing orders."}],[{"start":165.56,"text":"In the UK, the Financial Conduct Authority recently said it was considering whether to reform its rules on retail investor access to prediction markets, despite also saying it believed its ban on binary options to be “appropriate given the speculative, gambling-like nature of these contracts and the high risk of consumer harm”."}],[{"start":185.48,"text":"Polymarket said on Wednesday that it was “growing its presence and expanding into Europe” as it announced it was joining the Brussels-based trade association Blockchain for Europe. The company’s chief legal officer Neal Kumar said the firm was committed to “engaging early and openly” with policymakers in the EU. The firm operates a crypto-based international version and a more limited US-only version, which is regulated by the Commodity Futures Trading Commission."}],[{"start":213.08,"text":"Earlier this year the CFTC opened an investigation into Polymarket."}],[{"start":217.48,"text":"Kalshi, which this year overtook Polymarket to become the largest prediction market by volume, has also said it is working to replicate its US-regulated model overseas. In July, co-founder Luana Lopes Lara told Bloomberg Línea that Kalshi was in talks with various international regulators and was “very excited” about the prospect of future expansion in Europe."}],[{"start":244.52,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789038538_9830.mp3"}