Europe’s attempt at a coordinated response to the rise of prediction markets
Prediction markets are drawing growing scrutiny in Europe, with the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, saying some event contracts may already fall under existing restrictions on binary options.
If prediction-market contracts are treated as financial instruments, they move closer to the EU’s financial-markets framework than to gambling law, which remains largely governed by national rules. That would not create a single EU regime for prediction markets, but it would place parts of the sector within a more harmonised system for authorisation, distribution and retail investor protection.
According to ESMA, whether an event contract falls under financial rules depends on the event it is tied to. The regulator said some event contracts may be treated as bets under national gambling laws. If they qualify as financial instruments, they are derivatives, and their yes-or-no payout structure may bring them within existing binary-options restrictions.
“Where event contracts are financial instruments, they classify as derivatives and, given the binary outcome, fall within the scope of the existing national product intervention measures on binary options adopted by national competent authorities prohibiting their marketing, distribution or sale to retail clients,” the authority said.
ESMA added that companies offering or distributing prediction-market contracts in the EU must assess whether their products fall within national measures that prohibit the marketing, distribution or sale of binary options to retail clients.
A market caught between betting and trading
Prediction markets have recently gained visibility in the United States and beyond, with platforms such as Polymarket and Kalshi helping to bring event contracts into wider public debate. Supporters argue that these markets can produce useful forecasts by aggregating public expectations. Regulators, however, are increasingly focused on whether the products are simply a new form of betting dressed in financial language.
That question is now moving up the European agenda. ESMA’s statement adds an EU-wide financial-markets dimension to action already being taken by national gambling regulators.
In Great Britain, the Gambling Commission said prediction markets would likely fall within gambling regulation. “Whilst the presentation of prediction markets may differ, their core aspects are akin to what in the UK would be described as a ‘Betting Exchange’,” the regulator said.
The Commission also warned operators not to assume they could avoid licensing rules. “If a prediction market operator was to launch here in Great Britain, we do not believe they would be able to classify themselves as non-gambling products,” it said.
France has taken a similarly cautious approach. France’s gambling regulator, the Autorité Nationale des Jeux (ANJ), said prediction market platforms are not authorised in the country and are considered illegal gambling services. It said the main platforms had implemented geoblocking at its request to prevent betting from France.
The French regulator also pointed to the dual character of the products, saying prediction markets “resemble both betting platforms” and “specialised financial products”.
National action, European coordination
The Netherlands has moved from warning to enforcement. In June 2026, the Kansspelautoriteit, the Dutch regulator, said Adventure One QSS Inc., the company operating Polymarket, had offered games of chance on the Dutch market without the required licence. The regulator imposed a penalty order and said a €420,000 payment had been forfeited.
“Adventure One offers games of chance on the Dutch market under the brand name Polymarket, without having the correct licence to do so,” the Dutch authority said.
The Dutch regulator has also made clear that the issue goes beyond licensing. “In the Netherlands, betting on non-sporting events, such as political outcomes, is explicitly prohibited,” it told SiGMA News in a previous interview. “This prohibition applies regardless of whether an operator holds a licence.”
Ahead of the 2026 FIFA World Cup, nine European gambling authorities, Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain and Switzerland, signed a joint statement targeting the risks posed by unlicensed gambling operators and prediction-market platforms during the tournament. The joint position framed prediction markets as part of a wider concern over operators using innovation to sidestep national gambling rules, particularly where platforms allow users to take positions on sporting outcomes without the safeguards required of licensed operators.
Malta has approached the issue from a different angle. In March 2026, in remarks first reported by Business Now, Economy Minister Silvio Schembri said the government was “actively exploring the emerging field of prediction markets”, provided the sector was backed by a “clear, forward-looking legislative framework that enables it to develop responsibly and at scale”.
For now, Europe’s response remains split between EU-level financial supervision and national gambling rules. ESMA’s statement points to a common regulatory concern, but not to a single European framework. The immediate reality for prediction-market operators is a patchwork of national approaches, however, one increasingly shaped by cooperation between regulators.
Stay ahead of iGaming’s biggest stories with SiGMA’s Top 10 News countdown. The world’s biggest iGaming community brings you weekly insights and subscriber-only offers. Join HERE today.
