European Lotteries (EL), the organization representing state and licensed national lotteries across Europe, has called for a unified regulatory framework aimed at prediction markets. This appeal was made in a press release dated September 30, where EL emphasized the swift growth of prediction markets and the associated risks for consumers and regulatory systems.
The association raised alarms about the rising popularity of products that allow users to speculate on future events, like elections, by using "event contracts." These contracts offer a binary payout based on a yes-or-no question about the outcome of an event. EL warned that this boom could create regulatory loopholes, possibly jeopardizing existing consumer protections unless regulatory bodies adapt promptly.
Piet Van Baeveghem, the secretary general of EL, stressed the necessity for regulation to evolve alongside market developments, asserting, “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.”
The organization advocates for a regulatory approach grounded in the legal aspects of products rather than on terminology or technological variations. They also underscored the importance of technology neutrality, stating that advancements such as distributed ledgers, smart contracts, and tokenization should not influence the regulatory framework.
Currently, under EU regulations, event contracts that are classified as financial instruments fall under financial services regulations as outlined by MiFID II. Those that do not qualify are instead governed by national gambling laws. EL indicated that even if a product is classified as a financial instrument, it remains subject to applicable national gambling regulations, which leads to a disjointed regulatory environment.
EL expressed approval of the recent remarks from the European Securities and Markets Authority (ESMA) regarding the regulatory obligations of certain event contracts. In a July statement, ESMA noted that prediction markets with binary outcomes and fixed payouts may constitute restricted financial instruments and acknowledged that some event contracts could fall under national gambling laws. ESMA mentioned that contracts not categorized as financial instruments might also be subject to the forthcoming EU Markets in Crypto-Assets (MiCA) regulation.
EL highlighted the significance of collaboration between financial and gambling authorities to create a consistent regulatory approach. They pointed out that the lack of coherence in gambling regulations across EU member states complicates oversight and enforcement. This fragmentation is evident as various countries like France, the Netherlands, and Spain have introduced restrictions on prediction market platforms including Polymarket and Kalshi.
Earlier this year, nine European regulators initiated a coordinated effort to address unlicensed prediction market platforms across Europe, especially concerned about consumer risks related to platforms operating continuously without mandatory betting limits or cooling-off periods.
In contrast, the Gibraltar government has taken steps to regulate prediction markets, having implemented new regulations this summer under the Gambling Act 2025 that designate prediction markets as a unique licensable category.
