European Lotteries calls for clearer regulation of prediction markets 

European Lotteries (EL), the representative body for state and licensed national lotteries across Europe, is pushing for a harmonised regulatory framework for prediction markets.

In a press release published on 30 September, EL highlighted the rapid expansion of these products and the potential risks they pose to consumers and existing regulatory structures.

The association expressed concern that the increasing popularity of prediction market products, allowing users to speculate on outcomes such as elections through “event contracts” (products with a binary payout hinging on a yes-or-no question about a future event), could lead to regulatory loopholes. 

This, they warned, might undermine consumer protections if regulators do not adapt in time.

‘Regulation should keep pace’

Piet Van Baeveghem, EL’s secretary general, emphasised the importance of regulation keeping pace with market developments: “Prediction markets are developing rapidly, and regulation should keep pace,” he said. “EL’s position is simple: activities that present similar risks should be subject to similar safeguards.

“The focus should be on the nature of the product and activity, rather than the label or underlying technology attached to it.”

EL argued that regulatory treatment should be grounded in the legal characteristics, rather than on terminological or technological distinctions. 

The organisation also stressed technology neutrality, noting that innovations such as distributed ledgers, smart contracts and tokenisation should not affect the underlying regulatory approach.

Currently, under the EU regulatory framework, event contracts that qualify as financial instruments are governed by financial services regulations under MiFID II. Conversely, those that do not qualify fall under national gambling laws. 

EL pointed out that classification as a financial instrument does not exempt a product from applicable national gambling legislation, leading to a fragmented regulatory landscape.

EL agrees with ESMA

The trade body welcomed recent recognition by the European Securities and Markets Authority (ESMA) that some event contracts may also be subject to national gambling laws. 

In a statement issued in July, ESMA warned that prediction markets with binary outcomes and fixed payouts qualify as restricted financial instruments. The regulator left the door open for some event contracts to fall under gambling regulation in Europe, although it said those not deemed financial instruments could be subject to the upcoming EU Markets in Crypto-Assets (MiCA) regulation.  

EL stated that this acknowledgment “underlines the importance of close coordination between financial and gambling authorities to ensure a coherent regulatory approach”.

Challenges of fragmented regulation across the EU

Given that gambling regulation remains a national competence within the EU, EL highlighted divergent legal regimes, public-policy priorities and market structures across member states. This fragmentation complicates oversight and enforcement, making regulatory coherence and effective coordination between national authorities essential.

Many countries including France, the Netherlands and Spain have issued restrictions or blocks on prediction market platforms such as Polymarket or Kalshi. 

Earlier this year, nine European regulators announced a joint initiative targeting unlicensed prediction market platforms across the continent. Key among the regulators’ concerns were the risks to consumers when platforms could offer round-the-clock accessibility, despite there being no mandatory betting limits or cooling-off periods. 

However, the Gibraltar government published regulations this summer under its Gambling Act 2025, establishing prediction markets as a distinct licensable category.