Polymarket is lobbying across the UK and Europe to secure recognition of prediction markets as financial services rather than gambling products.
The company, one of the largest prediction platforms alongside Kalshi, has faced restrictions in Italy, France and the Netherlands, where regulators have treated its products as gambling.
According to the Financial Times, Polymarket has held discussions with regulators in London and Brussels, including the European Securities and Markets Authority, and national authorities across the European Union.
Its objective is to establish a regulatory pathway similar to the US, where event contracts can fall under the Commodity Futures Trading Commission.
That requires persuading European authorities that some contracts belong within financial regulation rather than existing gambling frameworks.
European regulators remain cautious about prediction market classification
Polymarket faces a difficult regulatory environment because European authorities have been reluctant to separate prediction markets from gambling based on product structure or marketing.
The challenge is complicated by concerns around gambling harm and consumer protection. Several European markets are tightening gambling advertising or broader regulatory controls, making governments cautious about creating alternative routes for products resembling betting.
However, prediction markets also represent a growing trading category. In the US, monthly prediction market trading has reportedly reached around $24bn (£18bn), creating a commercial incentive for platforms to seek access to other markets.
ESMA has discussed the sector with Polymarket since June. The regulator has acknowledged that event contracts cover a wide range of questions and that classification can depend on the underlying event.
Some contracts may qualify as financial instruments, while others may not. ESMA has also raised investor protection and market integrity concerns, including potential insider trading.
UK regulators have already signalled concerns over product classification
Britain has not formally blocked Polymarket, but the regulatory position still presents barriers.
The Gambling Commission has said commercial products meeting the legal definition of gambling must be licensed by the regulator, with spread betting being an exception overseen by the Financial Conduct Authority.
Its initial assessment stated: “Commercial products meeting the definition of gambling under UK legislation must be licensed and regulated by the Gambling Commission. Spread betting is an exception which is regulated by the Financial Conduct Authority (FCA).”
The Commission has not made a product-specific determination covering every possible prediction market structure. However, it has indicated that operators entering Great Britain would struggle to classify existing prediction market models as non-gambling products.
The FCA, meanwhile, has been consulting on expanding consumer access to investments, including speculative products. This creates room for further discussion, although it does not automatically provide prediction markets with a financial-services route.
Gibraltar and Malta offer alternative approaches to prediction markets
Developments in Gibraltar and Malta could provide useful regulatory tests as the sector seeks expansion beyond the US.
Gibraltar licensed ADI Predictstreet this summer as the first betting intermediary under its new Gambling Act before establishing dedicated rules for prediction markets and event contracts.
The framework provides specific licensing and supervisory requirements rather than placing every product within an existing category.
Malta has taken a more cautious approach and is exploring how prediction markets could be addressed through legislation. Its position matters because Malta is an EU member state with an established gambling licensing sector.
A workable Maltese framework would not automatically determine how prediction markets are treated elsewhere in Europe, but it could provide another model for regulators considering whether different contracts require different treatment.
European expansion remains critical to prediction market growth
Polymarket and Kalshi are also facing legal disputes in the US as states challenge whether sports event contracts should be treated as federally regulated financial products or gambling subject to state laws.
That uncertainty makes international expansion important for companies seeking to sustain growth and large valuations.
Europe presents commercial potential, but access requires more than persuading regulators that prediction markets are innovative financial products.
Authorities must determine how individual contracts fit existing gambling and financial legislation, which regulator should supervise them, and what consumer and market-integrity protections should apply.
Polymarket’s lobbying therefore centres on a fundamental classification question. If European authorities accept that some event contracts belong within financial regulation, platforms could gain a new route into major markets.
If regulators maintain that products based on sports, politics and other events primarily constitute betting, prediction market operators will instead face established gambling licensing systems and national restrictions.
The outcome is unlikely to be uniform, where gambling remains largely regulated nationally and financial products operate under separate legal frameworks.
Polymarket’s European push exposes the core regulatory question around prediction markets: when does an event contract become a financial product rather than gambling? Europe may require a contract-by-contract approach instead of forcing every prediction market into one regulatory category.
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