On July 16, the president of France's gambling regulator, l’Autorité Nationale des Jeux (ANJ), instructed internet service providers to block access to Polymarket, the leading platform in the prediction market sector. According to the ANJ, Polymarket is promoting illegal gambling services to a significant audience, reporting 578,751 visits and 205,057 unique visitors in June alone.
This directive followed a lengthy correspondence with Adventure One QSS Inc, Polymarket's operating company, which began in November 2024 when the ANJ concluded that the platform's offerings could be considered unauthorized gambling. After issuing a formal notice, Adventure One implemented geoblocking measures on financial transactions from France, although the ANJ noted this was effectively bypassed.
In February, the authority reiterated its view that prediction markets are illegal in France, highlighting their potential for addiction due to their similarity to regulated gambling, combined with an absence of protective measures typically found in the legal market.
The tipping point towards enforcement was issues of integrity; it appeared that some bets on Polymarket were potentially rigged, including wagers on weather events that suggested hacking of weather sensors. Following this, on May 4, the cybercrime unit of the Paris Public Prosecutor’s Office initiated an investigation, which revealed that Polymarket did not implement a know-your-customer system for verifying user identities.
The ANJ views the site's homepage, which features real-time odds, as further promotion of unauthorized gambling, a criminal act that can incur a fine of up to €100,000. The regulator is known to utilize its authority frequently and had already blocked 1,290 URLs in 2025 alone.
France is not alone in its crackdown. The ANJ has observed similar actions in Germany, Belgium, Romania, Switzerland, Poland, the Netherlands, Greece, Italy, Portugal, Spain, Ukraine, and the Czech Republic, all of which have imposed restrictions or outright blocks on prediction markets. iGB’s inquiry in March indicated that European gambling regulators were likely to continue classifying these platforms as unlicensed betting, a stance that has recently been reinforced by a statement from the European Securities and Markets Authority (ESMA).
On July 3, ESMA reminded firms of their obligation to assess whether newly introduced products fall under existing intervention measures related to binary options. Event contracts, which are binary payout products based on yes-or-no questions about future events, could qualify as financial instruments depending on the nature of the question asked. When they do, they are considered derivatives and are subject to the same restrictions on marketing and selling binary options to retail clients that have been in effect since 2018. The dissemination of 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, explained that the implications of ESMA's statement are framed by MiFID II, the EU's financial markets directive. If an event question pertains to underlyings listed in MiFID II, the contract is classified as a derivative.
This classification could encompass yes/no markets linked to categories such as equity indices, foreign exchange pairs, interest rates, commodity prices, and inflation rates. Running these contracts necessitates obtaining a full MiFID II investment firm license, exclusively for professional clients.
Ismail Vali, the founder and former CEO of Yield Sec and now the president of Gaming Compliance International, suggests that ESMA's clarification has broader ramifications beyond any single product type. He noted that prediction markets have marketed themselves as universal platforms for trading a variety of uncertainties across sectors including sports, politics, crypto, and economics. ESMA’s guidance begins to dismantle that universal framework.
For example, a contract asking whether Bitcoin will trade above a specific price by the end of the week begins to resemble a binary financial product more than an innovative gambling offering.
Vali argues that this statement from ESMA will likely lead to increased enforcement actions. According to him, ESMA is not introducing new rules but rather reinforcing existing regulations. This could accelerate enforcement, as regulators can act based on current legislation without waiting for new laws or interpretations.
Hambach concurs, stating that ESMA’s guidance could provide local authorities with a straightforward basis for enforcement, especially since the binary options ban has been established since 2018. The timing suggests imminent enforcement actions may follow. ESMA also clarified that the name of a product is less significant than its legal and economic characteristics. Vali reinforces this idea by asserting that if a product acts as a financial instrument, it should be subject to financial regulation, and if it qualifies as gambling, it should fall under gambling regulations.
The EU's cryptocurrency regulations do not offer a loophole either; tokenized contracts that meet MiFID II’s criteria would be excluded from MiCA (Markets in Crypto-Assets). Tokens linked to non-financial events, such as sports or cultural outcomes, may be labeled as “other crypto-assets,” but operators would still require MiCA licensing after the transitional period concludes this month.
On July 13, only ten days after ESMA’s statement, Gibraltar announced it would take a different route by creating its own regulation for prediction markets under the Gambling Act 2025. This new framework is said to be the first dedicated legal structure of its kind globally. The 24-page regulation mandates that every event contract must have certification from its Gambling Authority, prohibits operators from engaging in market manipulation or insider trading, and forbids contracts concerning criminal activities, death, or terrorism. Two operators, ADI Predictstreet and WagerWire, have already obtained licenses under this new regime.
Despite Gibraltar's new framework, ESMA's recent clarifications influence what kind of licenses Gibraltar or Malta can provide across Europe. Hambach points out that binary event contracts aligned with MiFID II are derivatives, and thus, subject to the ban on retail binary options, regardless of their status under gambling or MiCA licenses. Stripping away the financial components leaves products akin to sports betting markets, raising questions about their classification.
The vast demand for sports betting does exist, yet Vali contends that a sports-only prediction market cannot legitimately claim to exist outside of the gambling marketplace simply by utilizing terminologies related to contracts or statistical probabilities. In Germany, the categorization of a sports prediction market as licensable may hinge on its specific structure defined by the Interstate Treaty on Gambling, and there has already been public admonishment directed at Polymarket by local gambling authorities.
The situation presents a marked difference between Europe and the United States. In the U.S., operators have classified event contracts as futures or swaps under the Commodity Exchange Act, which allows them to assert that federal law prevails over state gambling regulations. In contrast, the financial classification in Europe has led to a retail ban on such products.
Vali suggests that this disparity has afforded American operators a competitive edge that benefits from both regulated and unregulated markets, allowing these platforms to charge fees while undermining taxation and consumer protections. As Vali puts it, “regulatory arbitrage is not a sustainable marketplace strategy. The objective of regulation is to oversee the marketplace, not just the regulated operators.”
For international operators, Hambach’s assessment is clear: they must adapt extensively to local regulations, which may involve limiting product offerings and obtaining necessary licenses, or abstain from markets where these options are unfeasible.
With the ANJ’s blocking efforts, ESMA’s reminders regarding regulatory compliance, and Gibraltar’s novel regulatory framework, the era of unrestricted prediction markets seems to be closing. Regulators will increasingly scrutinize whether these markets provide superior consumer protection, maintain integrity, and uphold tax obligations. If they fail to demonstrate such capabilities, they will likely be viewed not as innovations but as avenues for regulatory evasion.
