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 pointed out the swift rise of prediction market products and the associated risks they pose to consumers and current regulatory systems.
The organization expressed worry that the growing popularity of these products, which allow users to bet on outcomes like elections through what are known as "event contracts"—binary-payout products linked to yes-or-no questions about future events—could create regulatory gaps. Such oversights, they cautioned, could jeopardize consumer protections if regulators fail to respond appropriately.
Piet Van Baeveghem, EL’s secretary general, stressed the critical need for regulations to evolve alongside market trends. "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 advocated for regulatory measures to be based on the legal characteristics of products, rather than on terminology or technology. Furthermore, the organization underscored the need for technology neutrality, asserting that innovations like distributed ledgers, smart contracts, and tokenization should not influence the regulatory framework.
Under the existing EU regulatory system, event contracts that are classified as financial instruments are governed by financial services regulations outlined in MiFID II. In contrast, those that do not meet this classification fall under the jurisdiction of national gambling laws. EL noted that being classified as a financial instrument does not absolve a product from relevant national gambling regulations, creating a patchwork of regulatory environments.
The association welcomed the acknowledgment from the European Securities and Markets Authority (ESMA) regarding the applicability of some national gambling laws to certain prediction markets. In a July statement, ESMA warned that prediction markets featuring binary outcomes and fixed payouts qualify as restricted financial instruments. It also indicated that event contracts not classified as financial instruments could soon fall under the forthcoming EU Markets in Crypto-Assets (MiCA) regulation.
EL maintained that this recognition highlights the necessity for coordination between financial and gambling authorities to establish a coherent regulatory strategy.
The existence of national competencies regarding gambling regulation within the EU complicates the landscape, as EL observed significant variations in legal frameworks, public policy priorities, and market structures among member states. This fragmentation creates hurdles in oversight and enforcement, making coherent regulations and effective collaboration among national authorities imperative.
Several countries, including France, the Netherlands, and Spain, have imposed restrictions or bans on prediction market platforms like Polymarket or Kalshi. Earlier this year, nine European regulators launched a joint initiative focusing on unlicensed prediction market platforms across Europe, citing concerns about consumer risks due to around-the-clock accessibility without mandatory betting limits or cooling-off periods. Conversely, the Gibraltar government introduced regulations this summer under the Gambling Act 2025, classifying prediction markets as a unique licensable category.
