End of Regulatory Free Ride for Prediction Markets in Europe

The era of the borderless and unregulated prediction market is rapidly coming to a close across Europe. These platforms, which allow users to trade on the outcome of future events, are increasingly being targeted by both gambling regulators and financial oversight bodies. On 16 July 2024, the president of France’s gambling regulator, l’Autorité Nationale des Jeux (ANJ), took the significant step of ordering internet service providers to block access to Polymarket. As the most high-profile platform in this sector, Polymarket recorded 578,751 visits and 205,057 unique visitors in June alone, signaling a massive reach that the regulator could no longer ignore.

This enforcement action follows a long period of scrutiny. The ANJ had been monitoring Adventure One QSS Inc, the operator of Polymarket, since November 2024. The authority initially determined that the services offered amounted to unauthorized gambling. Despite attempts by the company to geoblock financial transactions from French territory, the regulator found these measures were easily circumvented by users. By February, the ANJ reiterated that such sites lack the mandatory protective mechanisms of the legal market and exhibit addictive features similar to regulated gambling. Concerns regarding market integrity further accelerated the crackdown, especially after suspicious betting patterns on weather events led to a cybercrime investigation by the Paris Public Prosecutor’s Office.

Numbers and facts

The scale of French enforcement is substantial, with the ANJ blocking 1,290 URLs in 2025 alone. France is not an outlier in this approach. According to the regulator's own assessment, countries including Germany, Belgium, Romania, Switzerland, Italy, and the Netherlands have already restricted or blocked prediction markets. A major point of contention discovered by the Office for Combating Cybercrime was the total lack of a know-your-customer (KYC) system on platforms available to European users. This absence makes it impossible to verify user identities or prevent minors from participating.

The European Securities and Markets Authority (ESMA) added a new layer of regulatory pressure on 3 July 2024. ESMA issued a statement reminding firms that event contracts hinged on yes-or-no questions often qualify as financial instruments under MiFID II. If a contract references interest rates, currencies, or climate variables, it is classified as a derivative. Because these are binary in nature, they fall under the strict bans on marketing and selling binary options to retail clients that have been in place since 2018.

Background

Prediction markets have historically tried to occupy a gray area by presenting themselves as marketplaces for "tradeable uncertainty." However, regulators are now dismantling this narrative. Ismail Vali, president of Gaming Compliance International, argues that a contract on whether Bitcoin will reach a certain price is clearly a financial product, not a mere gambling innovation. While US operators use federal financial shields to avoid state gambling laws, the European classification as a financial instrument leads to an outright ban for retail users.

"If a product functions as a financial instrument, it should not avoid financial regulation by calling itself a prediction market. If it functions as gambling, it should not avoid gambling regulation by calling itself a financial product." - Ismail Vali, President of Gaming Compliance International (GCI)

Even the new Markets in Crypto-Assets (MiCA) regulation does not offer an easy escape. Wulf Hambach of the law firm Hambach & Hambach explains that tokenized contracts meeting the MiFID II definition are excluded from MiCA. For other events like sports or elections, operators would need to be authorized as crypto-asset service providers. While Gibraltar introduced a dedicated framework for prediction markets in July 2025 requiring market manipulation policing, its utility within the broader EU remains limited due to the overarching binary options ban.

Why it matters for German players

For residents in Germany, these developments mean that platforms like Polymarket are classified as illegal gambling. Under the Interstate Treaty on Gambling 2021, only specifically licensed products are permitted. German law does not allow betting on social events, politics, or the weather. Consequently, players using these platforms have zero legal protection. There are no deposit limits, no link to the LUGAS national barred player database, and no oversight regarding fair play or payouts. As the GGL continues to cooperate with European partners, German players should expect more frequent payment blocking and DNS redirects when attempting to access these sites.

What it means for GGL-licensed casinos

Licensed operators in Germany stand to benefit from a more level playing field as regulators target the offshore shadow market. Prediction markets often act as betting exchanges by another name, poaching customers without paying gambling taxes or adhering to strict social responsibility standards. The stance taken by the ANJ and ESMA reinforces the value of a GGL license. It ensures that innovation must occur within a framework of integrity and transparency. For the legal industry, the fall of the "regulatory free ride" for prediction markets validates the high costs of compliance associated with licensed operations.