Polymarket Launches European Lobbying Push For Financial Services Status
Polymarket has stepped up efforts to be classified as a financial services company in Europe rather than a gambling operator, mounting a lobbying campaign aimed at regulators across the UK and European Union.
According to a Financial Times report, the prediction markets operator has been meeting officials in London, Brussels and several EU capitals, engaging the European Securities and Markets Authority (ESMA), the European Commission and national regulators as it looks for a route into markets where prediction markets are currently restricted or banned.
Arguing For MiFID Treatment
Polymarket wants its event contracts treated like derivatives under the EU's Markets in Financial Instruments Directive (MiFID) rather than as wagers subject to national gambling law.
A single MiFID-based licence would let the company avoid navigating a patchwork of gambling regimes across the continent, several of which, including France, Germany and Italy, have indicated prediction-market operators need local gambling licences.
The company's push began in earnest in June, when Polymarket's legal team met ESMA chair Verena Ross, followed a day later by discussions between company executives and the Financial Conduct Authority's chief executive, Nikhil Rathi.
Polymarket has since joined the advocacy group Blockchain for Europe and started talks with other European industry organisations to build support for its preferred regulatory treatment.
Regulators Have Already Split The Question
The classification fight is complicated by rulings already on the books.
ESMA confirmed in a July statement that event contracts with binary yes-or-no outcomes and fixed payouts already qualify as restricted financial instruments when they reference equities, indices, interest rates, currencies or commodities, meaning they fall within existing national bans on marketing binary options to retail clients.
Contracts tied to sports results and most political outcomes do not receive that treatment.
The FCA has told the UK Treasury that products within its regulatory perimeter appear to function as binary options and remain covered by the UK's permanent ban on retail binary options trading.
The regulator draws its own line between financial or climate-related event contracts, which sit under its remit, and sports or political contracts, which fall to the Gambling Commission, Polymarket's main revenue driver in the UK market.
That split means even a successful lobbying push would only reclassify part of Polymarket's business.
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The financial contracts would move under securities rules that restrict retail access, while sports and political markets, the bulk of what drives its trading volume, would stay under national gambling oversight in most jurisdictions.
The stakes are high for Polymarket, which is reportedly raising capital at a valuation above $20 billion and pursuing international expansion beyond Gibraltar, currently the only jurisdiction with a dedicated regulatory framework for prediction markets.
ESMA has so far shown a limited appetite for loosening its stance, separately warning that prediction markets remain vulnerable to manipulation and insider trading.
Polymarket's lobbying effort also lands against a backdrop of tightening scrutiny elsewhere.
The company has faced restrictions or legal challenges in several US states and disputes over its legal status in individual American markets, giving added weight to its argument that a harmonised financial-services classification would be preferable to fighting gambling regulators market by market.
Whether European authorities agree remains far from settled, with France, Germany and Italy among the jurisdictions signalling that a gambling licence, not a financial one, is still the expected route for prediction-market operators serving their markets.
