On July 16, France's gambling regulator, l'Autorité Nationale des Jeux (ANJ), mandated that internet service providers block access to Polymarket, a leading prediction market platform. This action was taken due to the platform's promotion of illegal gambling, which attracted an impressive 578,751 visits and 205,057 unique visitors in June alone.
This directive did not emerge suddenly; it was the culmination of ongoing scrutiny. The ANJ had been monitoring Adventure One QSS Inc., Polymarket's parent company, since November 2024, when they concluded the platform's operations could constitute unauthorized gambling.
Following a formal notice, Polymarket attempted to geoblock financial transactions from French soil, a strategy the regulator indicated was ineffective. By February of this year, the authority reiterated its stance that prediction markets in France are deemed illegal, also noting their addictive qualities comparable to regulated gambling, but without the safeguards offered in legal markets.
Concerns about the integrity of wagers on the site significantly fueled the transition from warning to enforcement. Reports indicated that certain bets, including those related to the weather, might have been manipulated. As a result, on May 4, the Paris Public Prosecutor's cybercrime unit launched an investigation. This inquiry revealed that Polymarket lacked a know-your-customer (KYC) system to verify user identities for its French and European client base.
With Polymarket's homepage displaying real-time odds—viewed by the ANJ as a promotion of illegal gambling, which carries a fine of up to €100,000—the regulator utilized its existing authority, having already blocked 1,290 URLs in 2025 alone.
France is not isolated in its approach; according to the ANJ, several other countries, including Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic, have also implemented restrictions or outright bans on prediction markets. Previously, in March, when asked about the potential for these markets to overcome regulatory hurdles in Europe, the consensus suggested regulators would continue to view them as unlicensed betting operations. However, a significant development occurred when Europe’s financial regulator entered the equation from an unexpected angle.
On July 3, the European Securities and Markets Authority (ESMA) issued a statement reminding businesses of their obligation to assess if new products fall under existing intervention measures related to binary options. This announcement indicated that event contracts—binary options tied to a yes-or-no outcome regarding future events—can be classified as financial instruments if they meet certain criteria, thus necessitating authorization as an investment firm for distribution within the EU.
Wulf Hambach, a partner at the German law firm Hambach & Hambach, explained that under MiFID II, if an event question references listed underlyings such as interest rates, commodities, or climate variables, the contract qualifies as a derivative. This definition encompasses various market scenarios, requiring an investment firm license and restricting distribution to professional clients.
Ismail Vali, founder and former CEO of Yield Sec and now president of Gaming Compliance International (GCI), stated that the implications extend beyond any particular product category. He argued that prediction markets, positioned as a universal platform for tradeable uncertainty across domains such as sports and finance, may now face fragmentation due to ESMA’s clarification.
Vali noted that contracts predicting bitcoin trading levels appear less like gambling and more like binary financial products.
According to Vali, the ESMA’s statement is poised to prompt regulatory action. "The important point is that ESMA is not creating a new rule. It is reminding firms that existing rules already apply," he said. He emphasized that this situation often leads to quicker enforcement, as regulators do not need to wait for new laws or guidance.
Hambach echoed these sentiments, suggesting ESMA's reminder may provide local regulators with a clear basis for enforcement, which could happen rapidly given that the binary options ban dates back to 2018. He also noted that the distinction of a product is irrelevant; only its legal and economic characteristics should dictate its classification.
The EU’s crypto regulations do not offer a loophole either. Tokens treated as financial instruments under MiFID II are excluded from the Markets in Crypto-Assets (MiCA) framework. According to Hambach, while tokens tied to non-financial events may qualify as different crypto assets, they would still require MiCA authorization as crypto-asset service providers once the transitional period ends this month.
Ten days following ESMA’s announcement, Gibraltar opted for a different approach by establishing a new licensing framework. On July 13, the government released regulations under its Gambling Act 2025, creating a distinct licensable category for prediction markets. Minister Nigel Feetham described it as "the first dedicated framework of its kind anywhere in the world."
This 24-page regulation mandates certification of each event contract by the Gambling Authority and requires operators to actively monitor for market manipulation and insider trading. It also prohibits contracts related to criminal conduct, death, terrorism, or war. Already, two operators, ADI Predictstreet and America’s WagerWire, have been licensed under this new regulation.
However, Hambach warned that ESMA’s recent clarification would impact what a Gibraltar or Malta license can offer in Europe. "Binary event contracts tied to MiFID II underlyings are derivatives and caught by the retail binary-options ban, regardless of gambling or MiCA licenses," he stated. Consequently, a sports-only prediction market “starts to look much less like a new financial innovation and much more like a betting exchange by another name,” according to Vali.
He acknowledged that demand for sports betting is substantial but cautioned that such products cannot avoid classification as part of the gambling market merely due to their contractual language. In Germany, the licensability of a sports prediction market hinges on its specific structure under local gambling treaties, and warnings against platforms like Polymarket have already been publicly issued by the gambling authority.
The disparity between Europe and the United States is becoming increasingly pronounced. In the U.S., operators have been portraying event contracts as futures to argue federal law takes precedence over state gambling laws. Conversely, in Europe, the classification as financial instruments results in a retail ban.
Vali pointed out that the regulatory framework in the U.S. has produced a competitor benefiting from both regulated and unregulated sectors while extracting fees but allowing taxation and consumer protections to erode. He concluded, "regulatory arbitrage is not a durable marketplace strategy. The purpose of regulation is to regulate the marketplace."
Global operators are now faced with a stark reality: they will need to adapt to local regulations, limiting their product offerings and obtaining necessary licenses, or refrain from entering markets where compliance is not feasible.
With the ANJ’s blocklist, ESMA’s reminders, and Gibraltar’s newly minted regulations, the era of unregulated prediction markets appears to be drawing to a close. Vali remarked that regulators will evaluate whether these markets genuinely enhance consumer protection and integrity. If they fail to do so, they will increasingly be perceived as merely a mechanism for tax and regulatory evasion.
