The European Securities and Markets Authority (ESMA), the EU's securities regulator, said in a statement that many prediction market event contracts may already fall within the bloc's existing ban on marketing binary options to retail investors. The regulator reminded firms they must assess whether newly offered products fall under national product intervention measures already in force.
ESMA said the statement responds to the growing popularity of prediction markets and rising retail participation globally. It defines event contracts as products with a binary outcome, a fixed payout or nothing, depending on a yes-or-no answer about a future event, and noted they may also qualify as bets under national gambling law.
Where an event contract qualifies as a financial instrument, ESMA said it classifies as a derivative and, because of its binary payout, falls within the scope of national binary options measures that bar marketing, distribution or sale to retail clients.
ESMA added that distributing such contracts in the EU requires authorization as an investment firm under MiFID II, even when offered only to non-retail clients. The regulator did not name specific platforms, but the statement lands as crypto-native prediction markets such as Polymarket have expanded trading volumes tied to political, sports and economic outcomes.
