Polymarket is seeking recognition as a financial services company in the UK and European Union, trying to open up markets where prediction contracts currently sit under gambling law. The company has talked to regulators in London and Brussels, the European Commission and the European Securities and Markets Authority among them, about treating its event contracts as financial products.
The framework Polymarket wants is financial services legislation, potentially including the EU’s Markets in Financial Instruments Directive, which governs investment firms and financial instruments. Prediction markets work much like financial exchanges, the company argues, letting customers trade contracts whose prices reflect the probability of real-world events. Its preferred route would shift oversight of qualifying products to financial regulators instead of leaving it to gambling licences issued country by country.
Polymarket joined Blockchain for Europe on Sept. 9 to back that expansion and its regulatory engagement across the EU. The Brussels-based trade association represents blockchain and digital asset companies in discussions with European policymakers. A consistent regulatory framework would let prediction markets develop as financial products and supply publicly available information through market pricing, Polymarket said.
ESMA has already warned that financial classification wouldn’t automatically open the door to retail customers. Event contracts qualifying as financial instruments would generally count as derivatives, the regulator said in July, and could fall under existing restrictions on binary options. Those rules prohibit marketing, distribution, and sale of the affected products to retail investors, while companies offering them to professional customers would still need the relevant authorization.
ESMA repeated the point in its September risk monitoring report, noting that major prediction market platforms lack the authorizations generally required to market and sell event contracts in the EU. The regulator also questioned why Polymarket and Kalshi restrict access in only some member states, and warned that their geographic controls can be sidestepped with a VPN. Depending on their characteristics, event contracts may fall under financial services, crypto-asset, or national gambling legislation.
The UK’s Financial Conduct Authority has staked out similar ground. Its current guidance puts prediction contracts involving financial or certain climatic events inside financial regulation, while sports and politics contracts generally land with the Gambling Commission. The financial prediction products the FCA has examined are binary options in its view, and those have been banned from sale to UK retail consumers since 2019.
The UK Gambling Commission said in February that prediction markets offering products resembling betting exchanges would generally need a betting intermediary licence. Operators without the right authorization shouldn’t target British customers, it added, rejecting the idea that prediction market products can operate outside gambling regulation simply because they use an exchange-based trading model.
Enforcement has already caught up with Polymarket in several European countries. Lithuania blocked the platform on Sept. 8 after its gambling regulator obtained a court order and concluded that users were effectively betting on real-world events without authorization. Internet providers were told to restrict access, and payment providers were ordered to stop transactions involving Adventure One QSS, the company identified as operating the platform. France, Italy, and the Netherlands have imposed restrictions of their own.
No UK or EU financial services authorization has been announced, and neither jurisdiction has agreed to exempt Polymarket’s products from existing gambling or retail investment restrictions. The discussions could open a route for some contracts to operate under financial legislation, though sports, political, and other event markets would still have to satisfy the applicable product rules before Polymarket could offer them to European customers.