Polymarket Courts Financial Regulators to Gain European Market Access

Polymarket, the US-based prediction markets platform, is shifting strategy in Europe. Recognising that conventional iGaming licences remain out of reach under hostile gambling regulatory regimes, Polymarket is now appealing to European financial authorities for recognition as a financial product—an effort that, if successful, could sidestep existing gambling bans across major markets.

Polymarket’s Campaign: From Gambling to Financial Product

Polymarket has been actively engaging with the European Securities and Markets Authority (ESMA), the European Commission, and financial supervisors from various EU states. Their pitch: treat Polymarket's sports prediction offerings as regulated financial products instead of betting, as the Commodity Futures Trading Commission (CFTC) does in the United States. According to the Financial Times, similar overtures are being made to the UK’s Financial Conduct Authority (FCA).

This reclassification would allow Polymarket to operate beyond the reach of most national gambling prohibitions, mirroring the US regulatory split between financial and gaming oversight. In its home market, prediction markets such as Polymarket and Kalshi remain contentious, with both embroiled in lawsuits against US state regulators, but under the CFTC's authority, they can legally offer services even where traditional online gambling is banned.

"Prediction markets grew out of the financial services industry and their continued treatment as exclusively within this remit is at the core of their success in the US." — Financial Times reporting

European Regulatory Barriers—and Escalating Bans

Polymarket faces explicit bans on its sports wagering services in at least ten European jurisdictions: France, Germany, Belgium, Romania, Switzerland, Poland, Greece, Cyprus, Portugal, and Spain. Lithuania joined this list recently, ordering ISPs to block Polymarkets website and accusing the company of circumventing laws on illegal remote gambling. France escalated enforcement this July, not only banning wagers but also blocking access entirely—even the provision of betting odds, viewed as illegal advertising if French customers might use VPNs to place bets remotely.

The UK Stand-off: Betting Exchange or Financial Product?

If Polymarket's lobbying of the FCA is successful, it would pit the regulator against the UK Gambling Commission (UKGC). The UKGC has repeatedly signaled that, barring a formal licence application, the default position is to treat prediction market operators as betting exchanges requiring an iGaming licence. Betfair introduced this model two decades ago, and regulators say the actual customer experience closely mirrors betting exchanges, regardless of financial market branding. Recognition as a financial product could set the stage for duelling authority between the two UK regulators.

In Spain and other jurisdictions, the line is even clearer. As Spanish officials stated when imposing bans on Kalshi and Polymarket, "prediction markets are considered gambling." Should ESMA endorse Polymarket as a financial service, member states face fresh compliance headaches.

Prediction Markets in the US: Backing and Lawsuits

Polymarket's success in the US is rooted in CFTC backing—an arrangement that persists despite active lawsuits in states including Nevada and New Jersey, where online gambling bans remain. Political support also plays a role, with former President Donald Trump voicing approval and Donald Trump Jr.'s firm 1789 Capital investing heavily in Polymarket. CFTC insists that products offered by Polymarket and Kalshi fall under its regulatory umbrella, allowing national distribution despite ongoing objections from state authorities.

European Alternatives: Gibraltar and Malta’s Diverging Paths

While most of continental Europe maintains a cautious or hostile stance, Gibraltar has charted a different course. The British territory has enacted licensing standards tailored for prediction markets under the oversight of its Gambling Commissioner, openly inviting operators to establish a presence. Operators licensed in Gibraltar could focus on grey markets or leverage their status as financial products in less regulated jurisdictions.

In parallel, Malta is crafting its own regulatory framework for prediction markets. Initially, the Malta Gaming Authority (MGA) was set to regulate the sector, but Malta may shift oversight to the Malta Financial Services Authority if Polymarket's financial-product model gains traction in Brussels to avoid direct entanglement with gaming regulation.

The Road Ahead: Uncertain Outcomes and Potential Conflicts

Polymarket's European push represents a clear bet on regulatory arbitrage, yet a successful financial reclassification could provoke jurisdictional disputes across the continent. National gambling and financial regulators may find themselves at odds over which framework applies—a precedent-setting tension in both the UK and EU member states.

Despite this uncertainty, alternative approaches in Gibraltar and Malta indicate some European jurisdictions are keen to attract prediction markets through tailored licensing, provided these operators can demonstrate compliance with either financial or gambling oversight.

For operators and stakeholders monitoring market access, the evolution of Polymarket’s campaign could reshape how sports-related prediction markets are regulated across the region.