TLDR
- European securities regulator ESMA says predictive market contracts with binary outcomes are already banned for retail investors under EU rules dating back to 2018.
- The warning makes clear that relabeling a product as an “event contract” does not change its legal classification – what matters is how the product works, not what it is called.
- No new rules have been introduced. The Emirates Authority for Standardization and Metrology said that it issued the statement due to the rapid growth of forecasting markets globally.
- Professional and institutional investors can still access these products, but only through firms with the appropriate MiFID II licence.
- The EU has no licensed predictive market platforms available to retail clients, closing off a market of approximately 450 million people.
The European Securities and Markets Authority issued a stark reminder to prediction market firms on July 3. If your product functions as a binary option, it will be treated as a binary option – no matter what it is called.
Latest: 🇪🇺 The European Securities and Markets Authority warns that several contracts for anticipated market events may already fall within the 2018 binary options ban on retail sales. pic.twitter.com/rAP0HSa1jz
— CoinMarketCap (@CoinMarketCap) July 4, 2026
ESMA’s statement came as expected global market trading volume exceeded $50 billion per month. Native cryptocurrency platforms have been a major driver of this growth, providing markets with everything from elections to central bank decisions.
The European Union has imposed a ban on binary options for retail investors since May 2018. This ban was originally a temporary measure under the Markets in Financial Instruments Regulation. Subsequently, this agreement was made permanent by most EU Member States through national legislation.
The Emirates Authority for Standardization and Metrology said that the legal classification of a product depends on its characteristics and not its marketing label. A contract that provides fixed compensation based on whether a future event occurs fits the definition of a financial instrument and is therefore subject to the current restrictions.
What this means for cryptocurrency platforms
For cryptocurrency-based prediction market platforms, the implications are direct. Any platform that offers two-outcome contracts to retail users in the EU violates current financial regulations, regardless of whether transactions are settled on the blockchain.
Polymarketthe largest cryptocurrency prediction market by volume, has already faced similar issues. The platform banned US users following a 2022 settlement with the Commodity Futures Trading Commission. Retail users in the EU now face their own access barriers.
The Emirates Authority for Standardization and Metrology did not mention specific platforms in its statement. But the message was clear: the current rules apply to everyone, and expectations of a booming market create no exception.
Professional and institutional investors are not directly banned. But companies that want to offer these products to professional clients still need a full MiFID II license – meaning the path to legal access in Europe comes with significant regulatory requirements.
The United States is fighting a different battle
Across the Atlantic, prediction markets find themselves locked in a separate legal dispute. State gaming regulators and the federal Commodity Futures Trading Commission are in direct conflict over who has the authority to regulate event contracts.
By March 2026, authorities in 11 states had taken legal or regulatory action against platforms including Kalshi and Polymarket. Nevada temporarily banned Like nothing operations, while the state of Arizona brought criminal charges against the company.
In April, the Commodity Futures Trading Commission (CFTC) declared exclusive federal jurisdiction over prediction markets. The agency has sued several states and filed court briefs in support of platforms like Calci.
The conflict escalated further. On June 30, a Massachusetts judge allowed state authorities to file an amended complaint against Calci, alleging that its sports contracts constitute illegal gambling under state law.
Tribal gaming groups and labor organizations have urged Congress to amend proposed legislation to explicitly prohibit contracts for sports-related events on prediction market platforms.
Legal experts say the dispute may eventually reach the US Supreme Court.
Currently, Europe remains completely closed to retail market access, and the regulatory picture in the US remains unstable.
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