Polymarket Lobbies for MiFID II Treatment of Prediction Contracts Across Europe

Polymarket is lobbying policymakers in Brussels, the UK and major European capitals to classify its event contracts as financial derivatives under MiFID II rather than gambling products. The effort seeks a unified EU framework instead of navigating separate national betting rules and licenses in each jurisdiction. ESMA stated on September 10 that prediction platforms including Polymarket and Kalshi lack required authorizations to offer event contracts in the EU, as reported by the Times of Casino.

The company wants qualifying contracts treated under the Market in Financial Instruments Directive, with crypto versions potentially routed through MiCA. Such categorization would allow broader marketing and sales across member states under financial-services rules. Without it, platforms face gambling-law restrictions that vary by country.

Restrictions Imposed by European Regulators

Spain, France, Portugal and Hungary have blocked or banned Polymarket. UK, German and Italian authorities have stated that local gambling licenses are required, treating the activity as either illegal gambling or unauthorized financial services. Polymarket has responded by engaging ESMA, the European Commission and the UK Financial Conduct Authority for guidance on when event contracts qualify as MiFID II derivatives and for authorization pathways.

ESMA Concerns on Integrity and Access Controls

ESMA has flagged investor-safety and market-integrity risks, including insider trading and manipulation in contracts linked to political, economic or corporate events. The regulator questioned whether geo-blocking measures suffice, noting users can circumvent them with VPNs. Some contracts could also trigger EU binary-options limits on retail distribution.

The debate will determine if prediction markets gain regulated status as financial infrastructure with customer-identification and surveillance obligations or remain subject to fragmented gambling and retail-product curbs. Operators and investors should track whether ESMA accepts the financial-market framing or maintains stricter barriers.

Reporting: Times of Casino

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