On July 16, the president of France's regulatory authority, l'Autorité Nationale des Jeux (ANJ), directed internet service providers to block access to Polymarket, one of the most prominent prediction market platforms. The ANJ stated that the site promotes illegal gambling services to a wide audience, reporting 578,751 visits and 205,057 unique visitors in June alone.
This order has been the culmination of an ongoing scrutiny, as the ANJ had been monitoring Adventure One QSS Inc, the company operating Polymarket, since November 2024. At that time, the regulator expressed concerns that the services offered by Polymarket amounted to unauthorized gambling activities.
Following this, a formal notice was issued, prompting the company to geoblock financial transactions from French territory. However, the ANJ noted that this measure was not effective in practice. In February 2025, the authority reiterated that prediction markets are classified as illegal in France, citing their addictive features akin to regulated gambling, exacerbated by the lack of the legal market's protective measures.
The tipping point for enforcement came with allegations of integrity issues; some bets on Polymarket appeared manipulated, especially wagers concerning weather events, suspected of being influenced by hacked sensors. On May 4, the cybercrime unit from the Paris Public Prosecutor’s Office launched an investigation, which was assigned to France's Office for Combating Cybercrime. They discovered that Polymarket's platforms for French and European users lacked a know-your-customer system to confirm users' identities.
The ANJ pointed out that the platform’s homepage displayed real-time odds, which they also interpreted as promoting unauthorized gambling, a criminal offense that could lead to a €100,000 fine. As part of their enforcement activities, the ANJ has blocked 1,290 URLs in 2025 alone.
France’s action is not isolated. According to the ANJ, several other countries including Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic have also imposed restrictions or blocks on prediction markets. When iGB inquired in March about the potential for prediction markets to bypass Europe’s regulatory challenges, the conclusion was that the continent's gambling regulators would continue to treat them as unlicensed betting.
Significantly, Europe’s financial regulator has recently entered the discourse, affecting developments across the regulatory landscape. On July 3, the European Securities and Markets Authority (ESMA) issued a statement highlighting that firms must determine whether newly launched products fall within existing intervention rules on binary options.
Event contracts that have a binary payout based on yes-or-no questions about future events may classify as financial instruments depending on the event in question. If they are classified as derivatives, they are subject to the national bans on the marketing, distribution, or sale of binary options to retail clients, which has been in effect since 2018. ESMA emphasized that distributing such contracts in the EU mandates the authorization of the firm, even if the clients are not retail individuals.
Wulf Hambach, a partner at the German law firm Hambach & Hambach, explained that the scope of the ESMA statement is delineated by MiFID II, the EU’s markets directive. When an event question references underlying assets listed in Section C(4)-C(10) – including interest rates, currencies, commodities, emission allowances, inflation rates, or climate variables – the contract is classified as a derivative, necessitating a full MiFID II investment firm license and limiting distribution to professional clients.
Ismail Vali, founder and former CEO of Yield Sec and currently president of Gaming Compliance International (GCI), noted that the implications extend beyond individual products. “Prediction markets have marketed themselves as a universal marketplace for tradeable uncertainty across various sectors including sports, politics, and finance. ESMA’s clarification starts to differentiate that universality,” he stated.
A contract that asks whether bitcoin will exceed a certain price by Friday shifts perception from an innovative gambling solution to a binary financial product.
Vali anticipates that the ESMA statement will not be ignored. “The key point is that ESMA is not enacting a new rule; it’s reminding firms that existing regulations already apply,” he said. “This moment often heightens the chances of enforcement, as regulators are no longer required to wait for fresh legislation or interpretations before taking action.”
Hambach concurs, asserting that the regulatory framework is already established. “The ESMA statement provides local authorities with a clear enforcement basis, potentially resulting in swift actions,” he noted, emphasizing that since the binary options ban has been in place since 2018, national regulators are equipped with the necessary processes and tools to enforce compliance, making the risk of enforcement imminent.
ESMA also clarified that commercial labels are negligible; the legal and economic characteristics of a product are what matter. Vali remarked, “If a product operates as a financial instrument, it should not escape financial regulation by labeling itself as a prediction market. Likewise, if it operates as gambling, it should not sidestep gambling regulations by calling itself a financial product.”
Additionally, the EU’s crypto regulations do not provide an alternative pathway. Hambach explained that tokenized contracts meeting MiFID II definitions for financial instruments are excluded from MiCA, and tokens tied to non-financial events like sports or politics may fall under “other crypto-assets,” requiring MiCA authorization as crypto-asset service providers after the conclusion of the transition period this month.
“From a legal standpoint, MiCA does not offer an escape route for binary financial event contracts,” he said. Vali expressed skepticism: “For many operators, MiCA might resemble an open door at a distance but quickly narrows once the actual product undergoes scrutiny.”
In a contrasting move, Gibraltar opted for a unique approach to the classification issue. On July 13, the government published regulations under its Gambling Act 2025, establishing prediction markets as a distinct licensable category. Minister Nigel Feetham described it as “the first dedicated framework of its kind anywhere in the world.”
This 24-page regulatory document mandates that each event contract must be certified by the Gambling Authority and requires operators to oversee market manipulation and insider trading. Additionally, it prohibits contracts related to criminal acts, death, terrorism, or war. Two companies, ADI Predictstreet and WagerWire from the U.S., have already obtained licenses under this new framework.
However, ESMA's clarification will impact what licenses from Gibraltar or Malta can practically offer across Europe. Hambach emphasized that “binary event contracts linked to MiFID II underlying assets are classified as derivatives and are subject to the retail binary-options ban, regardless of gambling or MiCA licenses.” By removing financial contracts from the equation, what remains is predominantly sports-related, raising the question. “A sports-only prediction market risks appearing more like a betting exchange under a different guise,” Vali observed.
While the demand for sports remains significant, he noted that such a product “cannot credibly claim to exist outside the gambling market merely by using contractual, market-based, or probabilistic language.” Hambach indicated that in Germany, whether a sports prediction market is eligible for licensing depends on its specific structure under the Interstate Treaty on Gambling; regulators have already publicly expressed concerns regarding Polymarket.
The differences between the U.S. and Europe in this regard are stark. In the U.S., operators have positioned event contracts as futures or swaps under the Commodity Exchange Act to assert that federal jurisdiction prevails over state gambling laws. Conversely, in Europe, the financial classification results in a retail ban.
Vali believes that the U.S. system has fostered a legally favored competitor that draws revenue from both regulated and unregulated betting, while platforms profit without proper taxation or consumer protections. His conclusion is that “regulatory arbitrage is not a sustainable market strategy. The purpose of regulation is not only to govern regulated operators but to also oversee the entire marketplace.”
Global operators, according to Hambach, will need to adapt significantly to local regulations, which may require limiting product offerings and obtaining licenses, or risk entering markets where neither is feasible.
With the ANJ’s blacklist, ESMA’s reminders, and Gibraltar’s new regulatory framework, the free era of borderless prediction markets is drawing to a close. The pertinent question for regulators, as Vali stated, is whether prediction markets improve outcomes related to consumer protection, integrity, tax compliance, and crime prevention. “If they do not, regulators will increasingly perceive them as innovations, but rather as avenues for tax evasion and regulatory deficiencies.”
