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Prediction Markets in Europe: A Regulatory Guide – Why the European Lotteries Urges Caution

By jili tutorial · October 2, 2026

Prediction Markets in Europe: A Regulatory Guide – Why the European Lotteries Urges Caution

Introduction: The Growing Controversy Around Prediction Markets

Prediction markets—platforms where users trade contracts on the outcome of future events—are generating intense debate across Europe. While advocates praise their ability to aggregate information and forecast everything from election results to sports scores, regulators are struggling to classify them. In a recent statement, the European Lotteries (EL), the umbrella body for state-owned lotteries in Europe, issued a strong warning to policymakers and business leaders: do not let marketing language obscure the true nature of these products.

This guide unpacks the EL’s position, explains the transatlantic divide in classification, and offers practical insights for understanding how prediction markets should be regulated—based on their legal characteristics and risks, not their technology or branding.

The Atlantic Divide: Two Distinct Views on Prediction Markets

Prediction markets are treated very differently on either side of the Atlantic. This fundamental difference is at the heart of the current regulatory confusion.

United States: Financial Instruments

In the US, where modern prediction markets originated, they are generally considered financial instruments. Platforms like Kalshi offer event contracts—essentially binary options tied to the outcome of real-world events (e.g., “Will the Fed raise rates in June?”). These are regulated by the Commodity Futures Trading Commission (CFTC) as derivatives or commodity contracts. The US approach focuses on market integrity, anti-manipulation rules, and investor protection.

Europe: Gambling Products

In most European jurisdictions, regulators view prediction markets as gambling products. The reasoning is straightforward: users stake money on uncertain outcomes, and the house or platform takes a cut. This aligns with the definition of betting or gaming in many national laws. As a result, prediction market operators in Europe often need a gambling license—a fundamentally different regulatory path than in the US.

Notable Exception: Gibraltar

Gibraltar has broken from the European norm by launching a dedicated regulatory framework for prediction markets earlier this year. This framework treats them as a distinct category, separate from both traditional gambling and financial services. The approach is being closely watched by other jurisdictions and was a key topic at the Global Prediction Markets Forum, held during the final day of the SBC Summit Lisbon. Attendees included representatives from Kalshi, WagerWire (a sports betting marketplace), and government officials from Gibraltar and Malta.

EL’s Core Message: Focus on Technicalities, Not Marketing

The European Lotteries’ statement cuts through the hype. The organization urges all stakeholders—policymakers, regulators, and industry leaders—to:

Piet Van Baeveghem, EL Secretary General, summarized:
“Activities that present similar risks should be subject to similar safeguards. The focus should be on the nature of the product and activity, rather than the label or underlying technology attached to it.”

Why a Country-by-Country Approach Is Necessary

The EL emphasizes that no one-size-fits-all European solution currently exists. Instead, a phased strategy is required:

Step 1: National-Level Analysis

Each EU Member State has its own gambling laws, consumer protection rules, and financial regulations. Before an international discussion can produce a coherent Europe-wide framework, countries must first clarify how prediction markets fit into their existing legal categories. For example:

Step 2: International Harmonization

Only after individual countries have ironed out the details can a cross-border dialogue lead to a tangible EU-wide strategy. The EL’s position is pragmatic: start by ensuring that prediction markets are not allowed to operate in a regulatory gray zone by exploiting differences between member states.

Practical Implications for Policymakers and Industry

What Regulators Should Do

What Industry Players Should Do

Examples of Current Regulatory Approaches

JurisdictionClassificationKey Features
United StatesFinancial instrumentRegulated by CFTC; event contracts allowed under certain conditions
Most EU countriesGambling productRequires national betting license; subject to gambling taxes and consumer safeguards
GibraltarHybrid / separate frameworkDedicated prediction market regulation; aims to attract innovative operators while maintaining control
MaltaGambling productMGA (Malta Gaming Authority) licences; sandbox for novel products may apply

Conclusion: The Future of Prediction Markets in Europe

The European Lotteries’ call to action is clear: treat prediction markets on their substance, not their spin. As these platforms grow in popularity—and as events like the SBC Summit Lisbon show increasing industry interest—regulators must move quickly to close any loopholes. The EL’s country-by-country approach provides a realistic roadmap, but the clock is ticking. Without consistent regulation, consumers may be exposed to unlicensed gambling disguised as “forecasting,” and state-run lotteries may face unfair competition from lightly regulated newcomers.

The debate will continue, but one thing is certain: the marketing language will not change the legal reality. Prediction markets that involve staking money on uncertain outcomes are, for all practical purposes, gambling—and they should be regulated as such.