Prediction markets platform Polymarket is lobbying regulators in the UK and European Union to classify its contracts as financial products rather than gambling instruments, a move that could determine how widely it can expand across European markets, according to a report by the Financial Times.
The New York-based company has been holding discussions with regulators in London, Brussels and several EU member states as it seeks a regulatory framework based on financial-services rules rather than the differing gambling regimes that currently apply across Europe.
Polymarket allows users to trade contracts linked to the outcomes of future events, spanning areas including elections, sporting competitions, central bank decisions, entertainment awards and weather.
The platform is seeking to have its contracts treated similarly to derivatives under the EU’s Markets in Financial Instruments Directive, or MiFID, rather than being classified as wagers subject to national gambling laws.
European Securities and Markets Authority and European Commission officials have been among those approached by Polymarket, while the company has also held discussions with national regulators as it explores potential licensing arrangements.
The push comes as Polymarket seeks to expand internationally and raises capital at a valuation reported to be above $20 billion. The regulatory classification of its contracts is potentially significant for its ability to offer the platform to retail investors across Europe.
Polymarket’s argument has some precedent in the US, where prediction markets can fall under the jurisdiction of the Commodity Futures Trading Commission as financial derivatives. That approach has nevertheless triggered a regulatory dispute, with some US states seeking to apply gambling laws to prediction-market operators.
Polymarket stepped up its European engagement in June. Its legal representatives met ESMA chair Verena Ross, followed a day later by discussions between company executives and Financial Conduct Authority chief executive Nikhil Rathi.
The company has also joined Blockchain for Europe and is in discussions with other European industry groups as it seeks support for its preferred regulatory treatment.
The UK’s regulatory framework illustrates the difficulty Polymarket faces. The FCA has been considering whether to change rules governing retail access to prediction markets, but has previously defended restrictions on binary options for retail customers because of concerns over their speculative and gambling-like characteristics.
Under the current UK approach, prediction contracts linked to financial or certain climate-related events can fall within the FCA’s remit, while markets involving political outcomes and sporting events are generally treated as gambling activities.
That distinction could be particularly important for Polymarket because sports and political events account for a significant proportion of activity on the platform and rival Kalshi.
Gambling regulators in the UK and several major European markets, including France, Germany and Italy, have indicated that prediction-market operators would need to obtain local gambling licences.
ESMA has so far shown limited enthusiasm for relaxing the existing European framework. The regulator recently warned that prediction markets are vulnerable to insider trading, highlighting concerns that could complicate Polymarket’s attempt to establish itself as a financial-services business.
