Europe’s securities regulator says yes-or-no “event contracts” like those offered by Kalshi and Polymarket could be barred from retail investors under the bloc’s decade-old binary options rules.
Posted July 6, 2026 at 6:43 am EST.
The European Securities and Markets Authority said Friday that some “event contracts,” the yes-or-no wagers underpinning prediction markets like Kalshi and Polymarket, may fall under the EU’s existing ban on marketing and distributing binary options to retail investors.
ESMA said event contracts with a binary payout tied to the outcome of a future event whose underlying assets are financial instruments under MiFID II are derivatives. The commercial name, “event contract,” is irrelevant to that classification, ESMA said.
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National product intervention measures have banned retail trading of binary options across the EU since 2018. ESMA added that firms offering these products even to non-retail clients need MiFID II authorization, and that tokenized event contracts that don’t qualify as financial instruments could still fall under national gambling law or the EU’s MiCA crypto framework.
ESMA’s warning follows months of piecemeal European enforcement. Spain’s consumer affairs ministry blocked Kalshi and Polymarket in May over missing gambling licenses, joining the Netherlands and Belgium, which took similar action earlier in the year. Nine European gambling regulators, including those of France, Germany, and Belgium, issued a joint statement in June warning against unlicensed prediction market platforms ahead of the FIFA World Cup.
The regulatory pressure on prediction markets isn’t limited to Europe: Kalshi and Polymarket are also fighting a patchwork of U.S. state-level gambling challenges even as they retain federal backing from the CFTC.
Related Listen: What Two DOJ Cases Reveal About the Legal Risks of Prediction Markets: Bits + Bips
AI-assisted content: This article was produced with the assistance of AI tools and was reviewed, edited, and fact-checked by a member of the Unchained editorial team before publication.
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