On July 16, France's gaming regulator, l'Autorité Nationale des Jeux (ANJ), ordered internet service providers in the country to block access to Polymarket, a leading prediction market platform. According to the ANJ, the site promotes illegal gambling to a large audience, having recorded 578,751 visits and 205,057 unique visitors in June alone.
This enforcement action followed a lengthy correspondence between the ANJ and Adventure One QSS Inc., the company operating Polymarket. The regulator first expressed concerns in November 2024, when it determined that the platform's services could be considered unauthorized gambling. A formal notification was issued, prompting the company to geoblock financial transactions originating from France—a measure that the ANJ claimed was effectively bypassed in practice. In February 2023, the authority reiterated its stance that prediction markets are illegal under French law, stating that they exhibit addictive traits akin to those of regulated gambling, exacerbated by the absence of protective features present in the legal market.
The tipping point for the ANJ came with findings of potential integrity issues; some bets on Polymarket appeared manipulated, with weather-related wagers suggesting possible hacking of weather sensors. On May 4, the cybercrime unit of the Paris Public Prosecutor’s Office opened an investigation led by France’s Office for Combating Cybercrime, which revealed that Polymarket’s services available to users in France and Europe lacked a know-your-customer system to verify identities.
With the site continuously displaying real-time odds—deemed by the ANJ as a promotion of unauthorized gambling, punishable by a fine up to €100,000—the regulator acted using its standard powers, having blocked 1,290 URLs in 2025 alone.
France is not alone in its crackdown on prediction markets; the ANJ has identified other European countries—Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic—that have also imposed restrictions or outright blocks on such platforms. When asked in March whether prediction markets might overcome Europe's regulatory hurdles, the assessment suggested that gambling regulators across the continent would continue to consider them as unlicensed betting operations.
A noteworthy development occurred with the European Securities and Markets Authority (ESMA), which on July 3 issued a reminder to firms concerning their responsibility to determine whether new products fall under existing product intervention measures regarding binary options. Event contracts, which are binary payouts based on future yes-or-no questions, may qualify as financial instruments, based on the specific questions posed. If they do, they are classified as derivatives, thus falling under the national bans on the marketing or sale of binary options to retail customers that have been in effect since 2018. ESMA stated that distributing such contracts within the EU necessitates authorization as an investment firm, regardless of whether clients are retail.
According to Wulf Hambach, a partner at a German law firm, the implications of ESMA's statement are guided by the MiFID II directive, noting that if the event question pertains to specific underlying categories listed in the directive—including interest rates, currencies, and commodities—the contract is classified as a derivative.
Ismail Vali, founder and former CEO of Yield Sec, believes that the ESMA statement's significance extends beyond specific product categories. Prediction markets have typically positioned themselves as broad trading platforms for various uncertainties—ranging from sports to economics. However, he argues that ESMA's clarification may fragment this perception of universality, indicating that products resembling conditions like whether bitcoin will trade above a certain price by Friday are shifting towards being viewed as binary financial products rather than gambling innovations.
Vali expects the ESMA statement to prompt regulatory actions. He emphasizes that no new regulations are being introduced; rather, existing rules are being reaffirmed, which may lead to heightened enforcement as regulators won’t need additional legislation to act.
Hambach shares the view that ESMA's reminder provides local authorities with a clear avenue for enforcement. With the binary options ban already established, national regulators are equipped with the necessary processes and tools for implementing immediate actions against non-compliant operators.
ESMA clarified that the commercial labels of a product are irrelevant; only its legal and economic characteristics matter. Vali summarizes this principle pointedly, stating that if a product operates as a financial instrument, it cannot avoid regulation simply by labeling itself as a prediction market, nor can it elude gambling regulations by masquerading as a financial product.
The impending EU cryptocurrency regulations do not offer any leeway either. Hambach explains that tokenized contracts fitting within MiFID II's financial instrument definitions fall outside the new MiCA framework, meaning operators could find themselves requiring additional authorization as crypto-asset service providers once the transitional period concludes this month. Vali remains skeptical, noting that while MiCA might appear to provide opportunities, its actual application could be restrictive upon detailed analysis.
In a contrasting response, Gibraltar on July 13 took a different approach by establishing a regulatory framework for prediction markets under its Gambling Act 2025. Minister Nigel Feetham described it as “the first dedicated framework of its kind anywhere in the world.” This new 24-page regulatory regime mandates certification of event contracts by the Gambling Authority, requires operators to prevent market manipulation, and bans contracts linked to criminal behavior, death, terrorism, or war. Two operators, ADI Predictstreet and WagerWire from the U.S., are already licensed under this framework.
Still, the implications of ESMA's clarifications will influence what a Gibraltar or Malta license can actually offer within Europe. Hambach notes that binary event contracts tied to MiFID II underlyings are still treated as derivatives under national bans, limiting what operators can legally offer. Essentially, without these financial contracts, prediction markets could resemble betting exchanges, raising questions about their status in a heavily regulated landscape.
The disparity between the situation in the U.S. and Europe is stark. In the U.S., operators have often classified event contracts as futures under federal law to navigate around state gambling laws. In contrast, the financial categorization of these products in Europe results in strict retail bans. Vali argues that this regulatory environment creates a competitive disadvantage for America, where value is derived from both regulated and unregulated sectors, ultimately leading to losses in tax revenue and consumer protection.
The evolving regulatory landscape—highlighted by the ANJ's enforcement actions, ESMA's reminders, and Gibraltar's new rules—signals the declining era of unregulated prediction markets. As Vali articulates, regulators will increasingly assess whether prediction markets enhance consumer protection and integrity against potential economic losses and crime. If not, they will likely be seen not as innovative platforms but as mechanisms for regulatory evasion and tax leakage.
