On July 16, the head of France's gaming regulator, l'Autorité Nationale des Jeux (ANJ), directed the country's internet service providers to restrict access to Polymarket, the most prominent prediction market platform. This action came after the regulator noted that the site was promoting illegal gambling services to a significant audience, registering 578,751 total visits and 205,057 unique visitors in June alone.
The ANJ's order was not unexpected, following a lengthy series of communications with Adventure One QSS Inc., Polymarket’s parent company. The ANJ had expressed concerns since November 2024, suggesting that the platform's operations could constitute an unauthorized gambling service.
Initially, the agency issued a formal notice, leading Adventure One to block financial transactions from French territory. However, the ANJ observed that such measures were often bypassed. In February, the regulator reiterated that prediction markets were illegal in France, warning that they exhibited addictive characteristics akin to those of regulated gambling, but lacked the protective mechanisms of the legal market.
The tipping point for enforcement came from integrity concerns. Some wagers on the site appeared to be pre-manipulated, particularly bets on weather events that hinted at potential sensor tampering. On May 4, the Paris Public Prosecutor's Office launched an investigation into Polymarket, assigning it to the Office for Combating Cybercrime. Their findings indicated that the platform available to French and European users lacked a know-your-customer (KYC) system for verifying user identities.
The ANJ noted that Polymarket's homepage was actively displaying real-time betting odds, which they interpreted as promoting unauthorized gambling—a criminal offense that could incur fines up to €100,000. The regulator utilized their existing powers to act, having already blocked 1,290 websites in 2025.
France is not alone in its stance. According to the ANJ, various countries, including Germany, Belgium, Romania, Switzerland, Poland, and others, have implemented restrictions or outright bans on prediction markets. In March, inquiries into the potential of prediction markets navigating Europe’s regulatory framework indicated that gambling regulators across the continent continued to treat these platforms as unlicensed betting mechanisms. Recent developments show that Europe’s financial regulators are also getting involved.
On July 3, the European Securities and Markets Authority (ESMA) made headlines by reinforcing that companies must assess whether newly introduced products fall under existing product intervention measures for binary options. Event contracts, which deliver binary payouts for yes-or-no questions regarding future events, may qualify as financial instruments, making them derivatives. As such, they are subject to the prohibitions on marketing, distributing, or selling binary options to retail clients established in 2018. ESMA clarified that distributing such contracts in the EU requires authorization as an investment firm, even for non-retail clients.
Wulf Hambach, a partner at the German law firm Hambach & Hambach, stated that the ESMA’s reach is defined by MiFID II, the EU's markets directive. If an event question relates to financial underlyings, the contract becomes a derivative, requiring full MiFID II investment firm licensing and limited distribution to professional clients.
Ismail Vali, founder and former CEO of Yield Sec and now president of Gaming Compliance International, believes ESMA's clarification could fragment the broad appeal of prediction markets, which have long presented themselves as universal trading platforms spanning sports, politics, and finance. He highlighted that contracts focused on questions like Bitcoin prices start to resemble binary financial products rather than innovative gambling offerings.
However, Vali anticipates that the ESMA's advisory will spark enforcement. "The key point is ESMA isn't introducing new rules but reiterating the applicability of existing ones," he noted. This clarification could accelerate regulatory responses, as authorities can enforce current rules without waiting for new legislation or guidance.
Hambach concurs that ESMA’s statement offers local regulators a clear foundation for enforcement, given that the binary options ban is already in place. He notes that regulators have the tools they need and warns that enforcement could happen quickly.
ESMA highlighted that the commercial branding of a product does not change its regulatory obligations. Vali expressed it plainly: if a product operates as a financial instrument, it cannot escape regulation by calling itself a prediction market. Conversely, if it serves as a gambling product, it cannot avoid gambling regulations by labeling itself a financial product.
The new EU regulations for crypto do not help either. Tokens that fit the MiFID II definition as financial instruments are excluded from the new Markets in Crypto-Assets (MiCA) framework. Tokens associated with non-financial events may fall under different classifications, but operators would still require authorization as crypto-asset service providers once transitional provisions conclude.
On July 13, Gibraltar took a different approach by establishing new regulations under its Gambling Act 2025, creating a specific licensable category for prediction markets. Minister Nigel Feetham described it as "the first dedicated framework of its kind anywhere in the world." This new regime mandates that every event contract be certified by the Gambling Authority, and requires operators to monitor for market manipulation.
While Gibraltar's framework may offer opportunities, the broader implications of ESMA’s statements limit its effectiveness in Europe. Hambach warned that binary event contracts connected to MiFID II underlyings still classify as derivatives and are thus subject to existing bans, regardless of jurisdictional licenses.
The transatlantic divide is glaring: in the United States, operators have harnessed federal financial regulation to shield against state gambling laws, but in Europe, such financial classifications impose retail bans. Vali argues that the U.S. model creates an uneven playing field, allowing some operators to exploit regulatory gaps while undermining consumer protections and tax contributions.
For global operators, Hambach believes significant adjustments will be necessary. They will either need to limit their product offerings and acquire licenses to comply with local regulations or choose to exit markets where compliance is unfeasible.
The collaboration of the ANJ’s blocklist, ESMA’s announcement, and Gibraltar’s new regulations indicates a narrowing window for prediction markets without borders. As Vali emphasized, regulators will increasingly analyze whether these markets enhance consumer protection and uphold integrity. If they fail in these areas, they will likely be viewed as contributing to tax and regulatory evasion, rather than perceived as innovators in the gambling landscape.
