European Lotteries (EL), which represents state and licensed national lotteries throughout Europe, is advocating for a unified regulatory framework for prediction markets.
In a press release dated September 30, EL underscored the swift growth of prediction market products, highlighting the associated potential consumer risks and challenges to existing regulatory structures.
The organization raised alarms about the rising popularity of these products, which allow individuals to speculate on events such as elections through “event contracts.” These contracts provide binary payouts based on a yes-or-no question regarding a future event, potentially creating regulatory loopholes. EL cautioned that if regulators do not respond adequately, it could jeopardize consumer protections.
Piet Van Baeveghem, the Secretary General of EL, stressed the necessity for regulation to evolve alongside market advancements. He stated, "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."
EL argues that regulatory frameworks should be based on legal characteristics rather than differences in terminology or technology. The organization also emphasized the need for technology neutrality, asserting that innovations like distributed ledgers, smart contracts, and tokenization should not influence existing regulatory practices.
Under the current EU regulatory framework, event contracts categorized as financial instruments are regulated by financial services laws under MiFID II. Those that do not meet this classification fall under national gambling laws. EL pointed out that mere classification as a financial instrument does not exempt products from relevant national gambling legislation, which leads to an inconsistent regulatory environment.
The trade association welcomed the European Securities and Markets Authority’s (ESMA) recent acknowledgment that certain event contracts may also come under national gambling laws. In a statement from July, ESMA indicated that prediction markets with binary outcomes and fixed payouts qualify as restricted financial instruments while suggesting that those not recognized as financial instruments could be under the forthcoming EU Markets in Crypto-Assets (MiCA) regulation.
EL remarked that this recognition illustrates the need for collaboration between financial and gambling authorities to ensure a unified regulatory approach.
The association illuminated the challenges posed by the fragmented regulatory landscape within the EU, where gambling regulation remains a national prerogative. EL noted that varied legal systems, public policy priorities, and market structures among member states complicate oversight and enforcement, necessitating regulatory coherence and effective coordination among national authorities.
Countries like France, the Netherlands, and Spain have instituted restrictions or outright bans on prediction market platforms such as Polymarket and Kalshi. Earlier this year, nine European regulators initiated a collaborative effort targeting unlicensed prediction market platforms operating in Europe, with key concerns centered on consumer risks due to platforms offering continuous access without mandatory betting limits or cooling-off periods.
Nonetheless, the Gibraltar government enacted regulations this summer under its Gambling Act 2025, recognizing prediction markets as a unique licensable category.
