Platforms marketing or selling event contracts in Europe may need authorisation under financial, crypto-asset or national gambling rules, ESMA said.
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In the latest Trends, Risks and Vulnerabilities report, regulator added that the largest prediction-market platforms do not currently hold the EU permissions that may be required for those activities.
Europe does not have a single prediction-market rulebook. ESMA’s analysis starts from the existing regimes that may already cover these products, depending on the contract, the underlying event and how the product is offered.
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An event contract may fall under MiFID II if it is tied to a financial or commodity underlying covered by the directive. ESMA stressed that not every yes-or-no contract meets that threshold.
When a contract does qualify as a financial instrument, firms arranging, marketing or selling it in the EU would need the relevant MiFID II authorisation. That applies whether the client is retail or professional.
Retail access may face an additional barrier. Financial-instrument event contracts would generally be treated as derivatives and fall under national measures restricting binary options.
Tokenised contracts that are not financial instruments may instead fall under MiCA. Other products may be treated as bets and require permission under the gambling laws of individual member states.
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Platform Restrictions Remain Uneven
ESMA said that prediction markets platforms, including Polymarket and Kalshi, restrict users in some, but not all, EU countries. The regulator questioned why other member states are not included, given the risk of unauthorised services under MiFID II, MiCA, gambling laws and national binary-options measures.
Prediction markets remain smaller in Europe than in the US. Globally, quarterly volume reached approximately $12 billion on Polymarket and $8.8 billion on Kalshi in the fourth quarter of 2025. ESMA suggested that Europe’s regulatory restrictions may partly explain the regional difference.
Malta became the first EU member state to publicly explore a dedicated prediction-market framework in March 2026. ESMA said any such development would still need an appropriate legislative structure.
Until then, platforms face a product-by-product classification question before they can market event contracts in the EU.
