Polymarket is intensifying its efforts to position itself as a financial services firm in Europe instead of a gambling operator. The prediction markets operator is actively engaging with European regulators, seeking to penetrate markets where prediction markets are currently limited or prohibited.
The company is reportedly in discussions with officials in the UK and throughout the European Union, including meetings with the European Securities and Markets Authority (ESMA) and the European Commission. Polymarket aims to persuade these authorities that it should be governed by the European Union’s Markets in Financial Instruments Directive (MiFID), which oversees financial instruments.
Currently, prediction markets remain largely inaccessible to European retail customers due to existing regulations. In June, a coalition of nine European gambling regulators launched a combined initiative targeting unlicensed prediction market platforms across the continent. This group includes France’s l’Autorité Nationale des Jeux, which banned Polymarket in 2024 on the grounds that its services could be classified as unlicensed gambling.
In Italy, a sponsorship agreement between Polymarket and Serie A football club Lazio was terminated after the company was identified as a prohibited site by the Italian gambling authority. However, a successful lobbying effort by Polymarket could pave the way for its classification as a financial services firm, potentially facilitating a more straightforward entry into European markets beyond Gibraltar. Earlier this year, Gibraltar became the first jurisdiction to implement a specific regulatory framework for prediction markets.
Regulatory challenges remain significant for Polymarket. In July, the ESMA clarified that prediction markets with binary outcomes and fixed payouts are classified as restricted financial instruments. During its inaugural discussion on prediction markets, the ESMA confirmed that certain contracts related to equities, indices, interest rates, currencies, or commodities are considered financial instruments and should be regulated as derivatives, falling under Annex I of the MiFID II regulation.
In the United States, the Commodity Futures Trading Commission regulates prediction markets as financial derivatives, though this stance has faced pushback from various states pushing for regulations under gambling laws.
In the UK, the Financial Conduct Authority (FCA) noted in its FCA Perimeter Report that contracts linked to financial or specific climatic events are under its jurisdiction, while non-financial events (such as sports and political outcomes) should be overseen by the Gambling Commission. The FCA indicated plans to explore the potential for further work regarding access to these products or to clarify regulatory boundaries.
Earlier this month, Polymarket became a member of Blockchain for Europe, an entity that collaborates with policymakers to forge a regulatory framework supportive of blockchain innovations within Europe.
