On July 16, the president of France's gambling regulator, l'Autorité Nationale des Jeux (ANJ), instructed internet service providers in the country to block access to Polymarket, a prominent prediction market platform. The regulator noted that the site promotes illegal gambling services, which attracted significant traffic, reporting over 578,000 visits and 205,000 unique visitors in June 2024 alone.
This decision emerged not suddenly, but rather as the culmination of a prolonged exchange. The ANJ has monitored Adventure One QSS Inc., Polymarket's parent company, since November 2024, suspecting that its offerings might constitute an unauthorized gambling service.
Following a formal warning, Adventure One attempted to geoblock financial transactions from French territory, a measure that, according to the regulator’s findings, was effectively bypassed. In February 2025, the ANJ reiterated that prediction market platforms are categorized as illegal in France, citing concerns about the sites' addictive elements similar to regulated gambling but lacking any protective measures found in the legal market.
The tipping point for action arose from concerns over integrity. Certain wagers on Polymarket appeared to be manipulated, with some regarding the weather suggesting possible hacking of the sensors. On May 4, the Paris Public Prosecutor's Office initiated an investigation led by France's Office for Combating Cybercrime. This inquiry revealed that Polymarket did not implement a know-your-customer (KYC) system to verify the identities of its users in France and Europe.
The Anj identified Polymarket's homepage, which displayed real-time odds, as a promotion of unauthorized gambling, a criminal offense punishable by fines of up to €100,000. Utilizing a power it regularly exercises, the ANJ had already blocked 1,290 URLs in just 2025.
France is not alone in its regulatory actions. According to the ANJ, several European nations—including Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic—have similarly restricted or forbidden prediction markets. Insights provided to iGB in March indicated that Europe's gambling regulators appear steadfast in their treatment of these markets as unlicensed betting environments. However, the landscape has evolved recently as Europe’s financial regulators have joined in, offering a different perspective.
In a contrast to the United States, where prediction markets have thrived under federal financial regulation, providing an advantage against state gambling authorities, the European Securities and Markets Authority (ESMA) issued a notable reminder on July 3. It urged companies to clarify whether new products might fall under existing intervention rules for binary options.
Event contracts, which promise binary payouts based on yes-or-no queries about future events, could qualify as financial instruments, depending on their context. Should this be the case, they are considered derivatives and would thus be subject to the retail marketing bans on binary options established since 2018. ESMA strongly emphasized that distributing such contracts in the EU necessitates authorization as an investment firm, regardless of whether the clients are retail.
Wulf Hambach from Hambach & Hambach law firm discussed this issue with iGB, noting that under MiFID II, event questions referencing various underlying factors—such as interest rates, currencies, commodities, inflation rates, or climate variables—transforms these contracts into derivatives. Consequently, operating such contracts mandates a comprehensive MiFID II investment license, limiting distribution to professional clients only.
Ismail Vali, who previously served as CEO of Yield Sec and is now the president of Gaming Compliance International (GCI), argued that this clarification profoundly impacts the perception of prediction markets. He expressed, "Prediction markets have expanded by positioning themselves as universal trading platforms for uncertainty across various sectors, including sports, politics, and finance. ESMA's statement begins to dissect that universality."
For example, a contract asking if Bitcoin will exceed a particular price by Friday resembles a binary financial product more than a gambling innovation.
Vali does not foresee the ESMA statement becoming obsolete. He asserted, "The crucial point is that ESMA is not introducing a new rule but rather reiterating existing regulations. This often leads to heightened enforcement likelihood as regulators can act without relying on new legislation."
Hambach concurred that the existing regulatory framework is prepared to act. "ESMA's reminder may equip local authorities with clear enforcement capabilities and fast responses, especially as the retail binary-options prohibition has been in effect since 2018," he noted, emphasizing that the risk of enforcement is imminent.
Furthermore, ESMA clarified that the commercial terminology of a product holds no weight; only the legal and economic characteristics matter. Vali succinctly stated, "If a product operates as a financial instrument, it cannot escape financial regulation by labeling itself a prediction market. Conversely, if it functions as a gambling product, it should not evade gambling oversight by presenting itself as a financial product."
The upcoming EU crypto regulations provide little leeway as well. According to Hambach, tokenized contracts falling under MiFID II definitions of a financial instrument will not benefit from the new MiCA regulations. Tokens associated with non-financial events might be classified as "other crypto-assets," but operators will be required to secure MiCA authorization as crypto-asset service providers after the transitional phase concludes.
"From a legal standpoint, MiCA does not offer an escape route for binary financial event contracts," he summarized. Vali expressed skepticism, arguing that many operators may find MiCA to be an illusion of opportunity that closes once the products are closely examined.
In a notable departure, on July 13, Gibraltar opted for a different classification strategy, crafting its own regulatory framework. The government unveiled regulations under the Gambling Act 2025, setting up prediction markets as a distinctive category requiring licensure. Minister Nigel Feetham described it as, "the first dedicated framework of its kind anywhere in the world."
The 24-page regulation mandates certification of every event contract by the Gambling Authority and obligates operators to monitor for market manipulation and insider trading. It also forbids contracts concerning criminal conduct, death, terrorism, or war. Presently, two licensees, ADI Predictstreet and America’s WagerWire, are compliant with the new rules.
However, the ESMA clarification significantly influences what a Gibraltar or Malta license can achieve within Europe. As Hambach articulated, "Binary event contracts linked to MiFID II underlyings are classified as derivatives and fall under the retail binary-options ban, irrespective of gambling or MiCA licenses." Analyzing the framework reveals that what remains largely concerns sporting events, raising questions about its nature.
A market focused solely on sports begins to resemble a betting exchange rather than a novel financial innovation. The existing demand in sports is substantial, but Vali affirmed that such a product "cannot credibly assert it exists outside the gambling sector simply because it employs contract language or probability."
In Germany, Hambach noted that the licensability of sports prediction markets is contingent on their specific structure under the Interstate Treaty on Gambling, and regulators have already issued warnings against Polymarket.
The disparity between jurisdictions is stark. In the U.S., platforms have described event contracts as futures or swaps under the Commodity Exchange Act, asserting that federal statute supersedes state gambling laws. Conversely, in Europe, the financial categorization triggers retail bans.
Vali pointed out that this American framework has nurtured a legally privileged competitor that extracts value from both regulated and unregulated betting, resulting in a situation where platforms profit while taxation and consumer protections diminish. He concluded, "Regulatory arbitrage is not a sustainable market strategy. The aim of regulation is to govern the marketplace, not exclusively managed operators."
Global operators now face a straightforward reality, as Hambach outlined: they will need to make substantial adjustments to fit local regulations or refrain from venturing into markets where compliance isn’t feasible. With the ANJ’s block on URLs, ESMA’s reminders on existing rules, and Gibraltar’s regulations, the era of unrestricted prediction markets seems to be nearing its end. Regulators are set to assess whether prediction markets contribute positively to consumer protection, market integrity, tax revenue, and crime prevention. If they fall short, regulators will increasingly perceive them as liabilities rather than innovations.
