European Lotteries Calls for Risk-Based Regulation of Prediction Markets Within Existing EU Frameworks

European Lotteries has urged regulators to apply a coherent approach to prediction markets by keeping them inside existing gambling and financial services rules. The organization warns that new dedicated regimes could open regulatory gaps, enable arbitrage, and reduce consumer safeguards. It stresses that treatment must follow each product’s legal characteristics, economic substance, and risks rather than its marketing label or delivery technology.

The position arrives as controversy over these event-contract products spreads from the United States, where federal and state authorities continue to dispute jurisdiction. Most European regulators have responded with restrictions. France, Spain, the Netherlands, Belgium, Germany, and Italy have all moved against prediction market platforms.

Calls for Technological Neutrality and Coordination

European Lotteries argues that distributed ledger technology, blockchain, smart contracts, and tokenisation should not alter the regulatory analysis. Frameworks must remain technologically neutral so equivalent activities face equivalent rules. Under MiFID II, event contracts qualifying as financial instruments fall under financial services oversight, yet this classification creates no automatic exemption from national gambling laws.

“The regulatory treatment of prediction markets should depend on the legal characteristics, economic substance and associated risks of the products concerned, rather than on the terminology used to market or describe them, or the technology through which they are offered,” the organization stated. Piet Van Baeveghem, EL Secretary General, added: “Prediction markets are developing rapidly, and regulation should keep pace. EL’s position is simple: activities that present similar risks should be subject to similar safeguards. The focus should be on the nature of the product and activity, rather than the label or underlying technology attached to it.”

He welcomed a recent European Securities and Markets Authority statement recognizing that event contracts may also constitute betting under national gambling law. Van Baeveghem said this recognition shows why close coordination between financial and gambling authorities is essential.

Fragmented European Landscape

Gibraltar has taken a different path, issuing a gambling licence to Abu Dhabi-based ADI Predictstreet before the FIFA World Cup and later moving the operator under a dedicated prediction-market regime. Malta has signaled interest in creating its own specialized framework. Kalshi has reported discussions with European Securities and Markets Authority and other bodies on the sector’s future.

The limitation in the current environment is the jurisdiction-by-jurisdiction assessment required by differing national legal traditions. This reality makes uniform application difficult and increases the chance that operators will seek out the most permissive venues.

Risks of Regulatory Arbitrage

Creating separate prediction-market regimes carries the clear risk of weakening overall consumer protections while inviting forum shopping. European Lotteries maintains that the safest course is to evaluate each product on its risks inside the established architecture. As these markets expand, authorities will need to align more closely to prevent gaps that neither financial nor gambling rules fully cover. Operators entering this space should anticipate heightened scrutiny wherever national frameworks treat event contracts as betting.

Reporting: Focus Gaming News

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