Prediction Markets Face Regulatory Challenges in Europe

On 16 July 2026, the president of France's l'Autorité Nationale des Jeux (ANJ) directed internet service providers to block Polymarket, a prominent prediction market platform. This order stemmed from Polymarket's alleged promotion of illegal gambling services to a large audience, recording over 578,751 visits and 205,057 unique visitors in June. This action capped off a lengthy investigation by the ANJ, which began in November 2024 when it suspected that Polymarket offered unauthorized gambling services. Despite a geoblock on financial transactions in France, users continued to circumvent this restriction. By February, ANJ declared prediction sites illegal, citing their addictive nature and lack of player protections.

Europe's Broader Response to Prediction Markets

France's action is part of a larger European effort. Countries like Germany, Belgium, and the Netherlands have also restricted or blocked such markets. In March, iGB speculated that Europe’s gambling regulators would continue treating prediction markets as unlicensed betting. This perspective shifted in July when the European Securities and Markets Authority (ESMA) highlighted that certain prediction market contracts might fall under financial regulation, particularly those that resemble binary options.

ESMA’s Influence and Financial Regulations

On 3 July, ESMA clarified that products with binary payouts, such as event contracts, might qualify as financial instruments. This includes those based on equity indices, FX pairs, and commodity prices. These contracts, therefore, fall under the same marketing bans as binary options enacted since 2018. Distribution requires investment firm authorization, a step that most prediction markets have not taken.

Wulf Hambach, a partner at law firm Hambach & Hambach, pointed out that ESMA’s guidance is grounded in MiFID II, requiring a full investment firm license for qualifying markets. This could reshape the landscape, as local authorities may enforce existing regulations rather than await new legislation.

Differing Approaches and Enforcement

While France and ESMA tighten restrictions, Gibraltar introduced a dedicated framework under its Gambling Act 2025. This regime categorizes prediction markets as licensable, a world-first according to minister Nigel Feetham. Operators must ensure integrity and prevent manipulation, with specific prohibitions on contracts related to crimes and terrorism.

However, ESMA’s guidelines cast doubt on how effective a Gibraltar or Malta license would be across Europe. Hambach notes that contracts resembling derivatives remain banned under retail binary options regulations regardless of their jurisdictional classification.

The Wider Implications

The European restriction contrasts sharply with the American approach, where prediction markets are often shielded by federal financial regulations to bypass state gambling laws. In Europe, the financial classification triggers more stringent bans.

Ismail Vali of Gaming Compliance International believes that the American context gives a competitive edge to platforms that could exploit regulatory gaps. However, Hambach and Vali agree that operators must adapt to local rules or withdraw from those markets where compliance is unfeasible.

The era of unrestricted prediction markets in Europe is undoubtedly drawing to a close. Regulators are keen to ensure these platforms do not erode consumer protections or tax revenues, treating them not as innovations but as potentially harmful regulatory loopholes.

A key question remains whether prediction markets enhance consumer protection and tax integrity. Should they fail to do so, European regulators are likely to intensify their efforts against these platforms.