European Lotteries (EL), representing state and licensed national lotteries across Europe, is advocating for a unified regulatory framework for prediction markets. In a press release dated September 30, EL marked the rapid growth of these offerings and the risks they may present to consumers and regulatory systems.
The association raised concerns about the surging popularity of prediction markets, which enable individuals to speculate on future events, such as elections, using “event contracts” that have binary outcomes based on a yes-or-no proposition. EL warned that this could create regulatory gaps that might weaken consumer protections unless regulators respond promptly.
Piet Van Baeveghem, EL’s secretary general, highlighted the necessity for regulations to evolve alongside market changes. "Prediction markets are developing rapidly, and regulation should keep pace," he stated. "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 argued that regulatory measures should hinge on the legal attributes of the products rather than on terminology or technology. They also championed technology neutrality, asserting that innovations like distributed ledgers, smart contracts, and tokenization should not alter the fundamental regulatory framework.
Within the current EU regulatory context, event contracts that are classified as financial instruments fall under financial service regulations established by MiFID II, while those that miss this classification are subjected to national gambling laws. EL noted that being labeled as a financial instrument does not exempt a product from applicable gambling legislation, resulting in a patchwork regulatory environment.
In alignment with its stance, EL welcomed a recent comment from the European Securities and Markets Authority (ESMA) acknowledging that some event contracts might also fall under national gambling laws. In a statement issued in July, ESMA cautioned that prediction markets offering binary outcomes and fixed payouts qualify as restricted financial instruments. ESMA suggested that event contracts not classified as financial instruments could instead be subject to forthcoming EU Markets in Crypto-Assets (MiCA) regulation. EL stressed that this recognition reflects the need for alignment between financial and gambling authorities to foster a cohesive regulatory framework.
EL emphasized the hurdles posed by varying legal frameworks and public-policy goals across EU member states, which complicate oversight. Effective regulatory coordination among national authorities is essential given the national jurisdiction over gambling regulations in the EU.
Several countries, including France, the Netherlands, and Spain, have imposed restrictions on prediction market platforms such as Polymarket and Kalshi. This year, nine European regulators launched a collective effort targeting unlicensed prediction market platforms, voicing concerns about consumer risks tied to unrestricted access, obligatory betting limits, and cooling-off periods.
Conversely, the Gibraltar government has established prediction markets as a distinct licensable category under its Gambling Act 2025, implementing regulations to govern this emerging space.
