Polymarket is intensifying its push to have event contracts classified as financial products rather than gambling across Europe, engaging directly with regulators in the United Kingdom and the European Union. According to the Financial Times, the U.S.-based prediction-market platform has met with the European Securities and Markets Authority (ESMA) and the European Commission, arguing that its event contracts should fall under the EU's Markets in Financial Instruments Directive (MiFID) rather than fragmented national gambling laws.
The distinction is critical because Polymarket's markets span varied underlying events. Contracts linked to interest-rate decisions or economic data can resemble financial derivatives, while sports or political outcome markets may be treated as bets. ESMA has already warned that event contracts must be assessed according to the question they ask, and if a contract qualifies as a financial instrument, a yes-or-no payout could bring it under national restrictions on binary options sold to retail clients. In July, ESMA stated that major prediction-market platforms generally lack EU authorization to distribute event contracts.
The UK presents a similarly hard boundary. The Financial Conduct Authority views prediction markets based on non-financial events such as sports and politics as gambling, while financial event contracts it has reviewed are considered binary options banned from retail sale. France has already escalated enforcement: its gambling regulator ordered internet service providers to block Polymarket after concluding it offered unauthorized gambling services.
Polymarket's argument leans heavily on the U.S. model, where event contracts operate within the Commodity Futures Trading Commission's derivatives framework. That approach has enabled Kalshi contracts to be distributed through major brokerage and trading platforms, and Kalshi recently captured approximately $9.6 billion of roughly $10 billion in weekly non-sports prediction-market volume. However, a MiFID classification would not automatically open European retail access; it could replace gambling restrictions with licensing, conduct, and binary-option prohibitions. The central question remains whether event contracts belong inside financial markets, gambling regulation, or different regimes depending on the underlying event.
