{"id":17,"date":"2026-07-24T08:33:54","date_gmt":"2026-07-24T08:33:54","guid":{"rendered":"https:\/\/betwayy.xyz\/?p=17"},"modified":"2026-07-24T08:33:54","modified_gmt":"2026-07-24T08:33:54","slug":"how-europe-is-calling-time-on-prediction-markets-regulatory-free-ride","status":"publish","type":"post","link":"https:\/\/betwayy.xyz\/?p=17","title":{"rendered":"How Europe is calling time on prediction markets\u2019 regulatory free ride"},"content":{"rendered":"
\n

On\u00a016 July\u00a0the president of France\u2019s regulator l\u2019Autorit\u00e9 Nationale des Jeux, ANJ, ordered the country\u2019s internet service providers to block access to\u00a0Polymarket<\/a>, the best known of the prediction market platforms. The site, the regulator said, promotes illegal gambling services to a particularly large audience: 578,751 visits and 205,057 unique visitors in June alone.\u00a0<\/p>\n

The order was less a bolt from the blue than the closing act of a long correspondence. The ANJ has had its eye on Adventure One QSS Inc,\u00a0Polymarket\u2019s\u00a0operating company, since November 2024<\/a>, when it judged that the platform\u2019s services could amount to an\u00a0unauthorised\u00a0gambling offering. <\/p>\n

A formal notice followed, after which the company\u00a0geoblocked\u00a0financial transactions from French territory \u2013 a measure that, the regulator noted, was circumvented in practice. In February of this year the authority reiterated that prediction sites are designated as illegal in France, warning that they display addictive features\u00a0similar to\u00a0those of regulated gambling, amplified by the absence of the legal market\u2019s protective mechanisms.\u00a0<\/p>\n

What tipped warnings into enforcement was integrity. Some bets on the platform appeared to be rigged: wagers on the weather suggested that weather sensors may have been hacked. On\u00a04 May\u00a0the cybercrime unit of the Paris Public Prosecutor\u2019s Office opened an\u00a0investigation, entrusted to France\u2019s Office for Combating Cybercrime, which found that the\u00a0Polymarket\u00a0platforms available to French and European users had no know-your-customer system to verify users\u2019 identities. <\/p>\n

With the site\u2019s homepage broadcasting real-time odds \u2013 itself, in the ANJ\u2019s reading, promotion of\u00a0unauthorised\u00a0gambling, a criminal offence carrying a \u20ac100,000 fine \u2013 the regulator reached for a power it exercises routinely, having blocked 1,290 URLs in 2025 alone.\u00a0<\/p>\n

France has plenty of company. By the ANJ\u2019s own count, Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain,\u00a0Ukraine\u00a0and the Czech Republic have all restricted or blocked prediction markets. When\u00a0iGB\u00a0asked in March\u00a0whether prediction markets could crack Europe\u2019s regulatory block<\/a>, the tentative conclusion was that the continent\u2019s gambling regulators would keep treating them as unlicensed betting. What has changed since is that Europe\u2019s financial regulator has joined\u00a0the fray \u2013 and from an unexpected direction.\u00a0<\/p>\n

The other regulator in Paris<\/strong>\u00a0<\/h2>\n

In the United States, prediction markets have flourished by wrapping themselves in federal financial regulation, a shield against state gambling authorities. On\u00a03 July\u00a0the European Securities and Markets Authority (ESMA)\u00a0demonstrated\u00a0that in Europe the same logic cuts the other way. The EU markets regulator issued a statement<\/a>\u00a0reminding firms of their obligation to assess whether newly offered products fall within the scope of existing product intervention measures on binary options.<\/p>\n

Event contracts \u2013 products with a binary payout hinging on a yes-or-no question about a future event \u2013 may qualify as financial instruments depending on the question asked. Where they do, they are derivatives, and being\u00a0binary,\u00a0they fall within the national bans on marketing,\u00a0distributing\u00a0or selling binary options to retail clients that have been in place since 2018. Distributing such contracts in the EU, ESMA added, requires\u00a0authorisation\u00a0as an investment firm even where clients are not retail.\u00a0<\/p>\n

Wulf Hambach, a partner at German law firm Hambach & Hambach, speaking to\u00a0iGB, says that the statement\u2019s reach is defined by MiFID II, the EU\u2019s markets directive. Where an event question references\u00a0underlyings\u00a0listed in Annex I, Section\u00a0C(4)-C(10) \u2013 interest rates, currencies, commodities, emission allowances, inflation\u00a0rates\u00a0or climate variables \u2013 the contract is a derivative.<\/p>\n

That concretely captures yes\/no markets on equity indices, FX pairs, rate decisions, inflation prints and commodity prices. Running such contracts, he notes: \u201crequires a full MiFID II investment firm\u00a0licence\u00a0and restricted distribution to professional clients only\u201d.\u00a0<\/p>\n

Ismail Vali, founder and former chief executive of Yield Sec and now president of Gaming Compliance International (GCI), argues that the significance goes beyond any\u00a0single product\u00a0category. \u201cPrediction markets have grown by presenting themselves as a universal marketplace for tradeable uncertainty: sports, politics, crypto, macroeconomics, war, culture, entertainment and finance. ESMA\u2019s clarification starts to break that universality apart,\u201d he tells\u00a0iGB. <\/p>\n

A contract asking whether bitcoin will trade\u00a0above a given level by Friday, he adds, \u201clooks much less like gambling innovation and much more like a binary financial product\u201d.\u00a0<\/p>\n

Old rules, new teeth<\/strong>\u00a0<\/h2>\n

Vali does not expect the statement to gather dust. \u201cThe important point is that ESMA is not creating a new rule. It is reminding firms that existing rules already apply,\u201d he says. \u201cThat is often the point at which enforcement becomes more likely, because\u00a0regulators no longer need to wait for new legislation, new interpretations or additional regulatory guidance before acting.\u201d\u00a0<\/p>\n

Hambach agrees that the machinery is already built. \u201cESMA\u2019s statement may give local authorities a clear enforcement hook, and the enforcement may come fast,\u201d he says, pointing out that because the binary options ban dates from 2018, national regulators have the processes and tools in place and \u201cthe enforcement risk is now imminent\u201d. <\/p>\n

ESMA has also stressed that commercial labels are irrelevant: only a product\u2019s legal and economic characteristics matter. Vali puts the principle more bluntly: \u201cIf a product functions as a financial instrument, it should not avoid financial regulation by calling itself a prediction market. If it functions as gambling, it should not avoid gambling regulation by calling itself a financial product.\u201d\u00a0<\/p>\n

Nor does the EU\u2019s crypto regime offer\u00a0a way out.\u00a0Tokenised\u00a0contracts that meet the MiFID II definition of a financial instrument are excluded from\u00a0MiCA, Hambach explains, tokens tied to non-financial events such as sports, elections or cultural outcomes\u00a0may qualify as \u201cother crypto-assets\u201d, but operators would then face\u00a0MiCA\u00a0authorisation\u00a0as crypto-asset service providers once the transitional period ends this month. <\/p>\n

\u201cFrom a legal perspective,\u00a0MiCA\u00a0is not an escape hatch for binary financial event contracts,\u201d he says. Vali is\u00a0sceptical: \u201cFor many operators,\u00a0MiCA\u00a0may be another door that looks open from a distance but narrows quickly once the actual product is\u00a0analysed.\u201d\u00a0<\/p>\n

Gibraltar\u2019s opening move<\/strong>\u00a0<\/h2>\n

Ten days after ESMA\u2019s statement, Gibraltar chose a different answer to the classification puzzle: write a rulebook of one\u2019s own. On\u00a013 July\u00a0the government published regulations<\/a> under its Gambling Act 2025,\u00a0establishing\u00a0prediction markets as a distinct licensable category. In minister Nigel Feetham\u2019s words, \u201cthe first dedicated framework of its kind anywhere in the world\u201d.<\/p>\n

The 24-page regime requires every event contract to be certified by the Gambling Authority, obliges operators to police market manipulation and insider dealing, and prohibits contracts on criminal conduct, death,\u00a0terrorism\u00a0or war. Two licensees, ADI\u00a0Predictstreet\u00a0and America\u2019s\u00a0WagerWire, are already in the fold.\u00a0<\/p>\n

Yet ESMA\u2019s clarification shapes what a Gibraltar or Malta\u00a0licence\u00a0can\u00a0actually deliver\u00a0in Europe. \u201cBinary event contracts tied to MiFID II\u00a0underlyings\u00a0are derivatives and caught by the retail binary-options ban, regardless of gambling or\u00a0MiCA\u00a0licences,\u201d says Hambach. Strip out the financial contracts and what\u00a0remains\u00a0is\u00a0largely sport\u00a0\u2013 which invites an awkward question. \u201cA sports-only prediction market starts to look much less like a new financial innovation and much more like a betting exchange by another\u00a0name,\u201d says Vali.<\/p>\n

Sports demand is large, he concedes, but such a product \u201ccannot credibly claim to be outside the gambling marketplace simply because it uses the language of contracts, markets or probability\u201d. In Germany, Hambach notes, whether a sports prediction market is licensable at all depends on its concrete structure under the Interstate Treaty on Gambling \u2013 and the gambling authority has already warned publicly against\u00a0Polymarket.\u00a0<\/p>\n

Shield in America, ban in Europe<\/strong>\u00a0<\/h2>\n

The transatlantic contrast is now stark. In America, operators have\u00a0characterised\u00a0event contracts as futures or swaps under the Commodity Exchange Act to claim\u00a0that federal law overrides state gambling law.\u00a0In Europe,\u00a0the financial\u00a0classification triggers a retail ban. <\/p>\n

Vali argues the American arrangement has produced a legally advantaged competitor that pulls value from regulated and unregulated betting alike, with platforms taking fees while taxation and consumer protections leak away. His conclusion is that\u00a0\u201cregulatory arbitrage is not a durable marketplace strategy.\u00a0The purpose of regulation is not to exclusively regulate regulated operators. The purpose of regulation is to regulate the marketplace.\u201d\u00a0<\/p>\n

For global operators, Hambach\u2019s prognosis is unsentimental: they will need to heavily adjust to local rules \u2013 restricting product ranges and obtaining\u00a0licences\u00a0\u2013 or refrain from markets where neither is possible.<\/p>\n

Between the ANJ\u2019s blocklist, ESMA\u2019s reminder and Gibraltar\u2019s rulebook,\u00a0the era of the borderless\u00a0prediction\u00a0market is closing.\u00a0The\u00a0question regulators will ask, says Vali, is whether prediction markets deliver better outcomes on consumer protection, integrity,\u00a0tax\u00a0and crime. \u201cIf they do not, regulators will increasingly treat them not as innovation, but as tax and regulatory leakage.\u201d\u00a0<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

On\u00a016 July\u00a0the president of France\u2019s regulator l\u2019Autorit\u00e9 Nationale des Jeux, ANJ, ordered the country\u2019s internet service providers to block access to\u00a0Polymarket, the best known of the prediction market platforms. The site, the regulator said, promotes illegal gambling services to a particularly large audience: 578,751 visits and 205,057 unique visitors in June alone.\u00a0 The order was […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/betwayy.xyz\/index.php?rest_route=\/wp\/v2\/posts\/17","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/betwayy.xyz\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/betwayy.xyz\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/betwayy.xyz\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/betwayy.xyz\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17"}],"version-history":[{"count":0,"href":"https:\/\/betwayy.xyz\/index.php?rest_route=\/wp\/v2\/posts\/17\/revisions"}],"wp:attachment":[{"href":"https:\/\/betwayy.xyz\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/betwayy.xyz\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/betwayy.xyz\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}