ESMA warns many prediction market event contracts already face EU retail ban
ESMA warned that many prediction market “event contracts” may already fall under existing EU restrictions on binary options, regardless of how they are marketed. Contracts with binary outcomes and fixed payouts are likely to qualify as financial instruments, which would bar their sale to retail investors under national measures implementing ESMA’s 2018 rules. Even when offered only to professional or institutional clients, qualifying contracts still require authorization under MiFID II. ESMA said this is a reminder, not a new rule, issued because prediction markets have grown quickly across Europe. In the US, prediction markets face an intensifying legal fight over whether they are gambling or federally regulated derivatives. State regulators in multiple states have acted against platforms like Kalshi and Polymarket, while the CFTC claims exclusive authority over event contracts. The conflict has prompted calls for congressional clarification and may ultimately reach the Supreme Court.
