Polymarket seeks EU, UK approval to treat contracts as financial

Polymarket is asking UK and EU regulators to classify its prediction-market contracts as financial products under the EU Markets in Financial Instruments Directive (MiFID) rather than as gambling. The New York-based company runs an online market where users trade contracts tied to future events, including elections, sports outcomes, central bank decisions, entertainment awards and weather.

Polymarket increased engagement with European authorities in June. Company lawyers met the chair of the European Securities and Markets Authority, Verena Ross, and executives met the Financial Conduct Authority chief executive Nikhil Rathi the next day. The firm has also held talks with national regulators, European Commission officials and industry groups and joined the trade association Blockchain for Europe.

The company wants its event-linked contracts treated like derivatives under MiFID so it can offer them to retail investors across the EU under a single financial-services framework. Polymarket is raising capital at a valuation reported above $20 billion and is pursuing wider international expansion.

Several European countries currently treat prediction markets as gambling. Gambling authorities in the UK, France, Germany and Italy have told operators they would need local gambling licences to offer markets tied to political or sporting outcomes. In the UK, contracts linked to financial outcomes or certain climate events can fall within the FCA’s remit, while markets involving political results and sports are generally regulated as gambling.

European regulators have raised market-integrity concerns. ESMA has warned that prediction markets can be vulnerable to insider trading. The FCA has defended limits on binary options to retail customers because of their speculative characteristics. Those concerns are factors as regulators consider whether to accept a MiFID-based approach.

In the United States, some prediction markets fall under Commodity Futures Trading Commission rules, and that approach has led to legal disputes with state authorities that have sought to apply local gambling laws. European authorities face similar questions about oversight, consumer protection and market integrity as they consider how to classify prediction markets.

The regulatory outcome will determine whether Polymarket can offer its full range of markets to retail investors across Europe and which licensing regime will apply. The company is seeking a single, finance-based framework rather than a patchwork of national gambling licences.