European Lotteries calls for clear rules on prediction markets in Europe

European Lotteries (EL) wants a harmonized regulatory framework for prediction markets and event contracts, arguing that the current split between financial regulation and gambling law leaves the same product exposed to different treatment depending on the country and the authority looking at it. For PSPs and high-risk operators, the message is simple: the product label is not the point; the underlying risk profile is.

1. In a statement released on 30 September, EL said prediction markets are expanding faster than the rules meant to govern them. The association represents licensed state and national lottery operators across Europe.
2. The products in question let users speculate on future outcomes, such as elections, through event contracts. They work as binary-payoff products: the user answers yes or no to a question about a future event, and the outcome determines whether the user wins or loses.
3. EL’s secretary general, Piet Van Baeveghem, said activities with similar risks should have similar safeguards. The group’s position is that regulation should follow the nature of the product and the activity, not the commercial name or the technology used to offer it.
4. The association applies that logic to distributed ledgers, smart contracts, and tokenization as well. In EL’s view, those technologies should not change the regulatory approach at the core of the product.
5. EL says the current system is split between two regimes: event contracts that qualify as financial instruments fall under MiFID II, while those that do not are covered by national gambling laws. The association also notes that being treated as a financial instrument does not remove the obligation to comply with applicable national gambling legislation.

EL also backed a recent ESMA position that some event contracts may be subject to national gambling rules. In a July statement, the European Securities and Markets Authority said products with binary outcomes and fixed payoffs can be treated as financial instruments, while also leaving open the possibility that certain contracts fall under gambling regulation. ESMA also noted that products that are not financial instruments could come under MiCA (Markets in Crypto-Assets Regulation).