Polymarket Tries New Approach To Win Over Sceptical Europe

Realising it faces an unwinnable uphill battle against European gambling regulators, predictions giant Polymarket is attempting to sidestep them completely by lobbying financial services watchdogs to allow it access to the continent.

According to reports in the Financial Times, Polymarket has been meeting with financial regulators in the EU and the UK, arguing that it should be seen as a financial product and not a form of gambling.

That would allow it to operate outside the framework of gambling regulation, much as prediction markets do in the United States, where they continue to enjoy great success.

Polymarket has been meeting with the European Securities and Markets Authority (ESMA) and the European Commission, as well as financial regulators from EU member states, the FT said.

If Polymarket could successfully convince these agencies that the markets it offers on sports should be treated as financial products, it would allow the operator to ignore the frosty reception it has so far received from European authorities.

In the EU alone, the company is explicitly banned from offering its sports wagering services in France, Germany, Belgium, Romania, Switzerland, Poland, Greece, Cyprus, Portugal and Spain.

Only a few days ago Lithuania joined this list, after it ordered a block on Polymarket and accused the predictions operators of attempting to “circumvent restrictions on illegal remote gambling”.

In July, France upgraded its existing ban by blocking access to Polymarkets website in its entirety. Despite a prohibition on placing bets, French citizens were still visiting the site, where they could view odds and then use VPNs or other tools to place bets.

Providing access to odds, even if wagers were not directly accepted from France, constitutes illegal advertising, officials said.

Like they do it back home

Prediction markets grew out of the financial services industry and their continued treatment as exclusively within this remit is at the core of their success in the US.

However this is still a controversial position in Polymarket’s country of origin and the operator, along with its rival Kalshi, are embroiled in several lawsuits against US state regulators in Nevada, New Jersey and elsewhere.

In several states that do not allow online gambling in any form, predictions providers continue to be available, to the outrage of politicians and officials.

This is in large part because of the strong backing the sector enjoys from the Trump Administration and its financial regulator the Commodity Futures Trading Commission (CFTC).

The CFTC continues to insist that it is the competent body to regulate predictions and that there are no issues with Kalshi and Polymarket offering their sports betting products across the country.

President Donald Trump has expressed support for the sector and his eldest son, Donald Trump Jr., has invested hundreds of millions of dollars in Polymarket through his venture capital firm 1789 Capital.

A fight brewing

A successful charm offensive by Polymarket to have itself classified exclusively as a financial product would set up several troubling conflicts across Europe.

In the UK for example, should the Financial Conduct Authority agree that Polymarket's activity falls under its remit, it would place two national regulators on a collision course.

The Gambling Commission has been clear that, although it cannot decide completely until a licence application is made, the typical activity of a predictions market operator is very likely to require a betting exchange licence to make its services legal in the UK.

A product that offers bets on two sides of the same event is not an especially new idea, regulators and industry veterans have noted.

Trailblazers Betfair launched their exchange offering in the year 2000 and the company eventually became a core component part of what is now international gambling giant Flutter.

Although the trappings of a prediction operator may mirror those of financial trading, the core concept is close enough to exchanges to fall under that remit, the Gambling Commission has indicated.

Similarly in Spain, officials were clear when they issued bans to Kalshi and Polymarket that “prediction markets are considered gambling”.

Any kind of theoretical acceptance by ESMA of Polymarket’s status as a financial trading platform would create a unique set of headaches for EU member states.

Prediction has friends in Europe

Elsewhere on the continent, others are taking a different approach. Gibraltar recently passed into law its first set of licensing standards for prediction markets and is actively looking to recruit operators to set up in the British-controlled peninsula.

This licensing project is managed by the region’s Gambling Commissioner.

Any operators that do choose to set up in Gibraltar are likely to either target global jurisdictions where they can operate under the guise of being a financial product or in grey markets where regulations are uncertain.

Malta, too, has said it is developing its own prediction market model, which would be overseen by the Malta Gaming Authority.

If Polymarket succeeds in winning the hearts and minds of officials in Brussels, that plan may need to be altered to transfer authority to the Malta Financial Services Authority or else see operators staying to ensure that they maintain distance between themselves and gambling regulations.