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Polymarket lobbies EU and UK regulators to reclassify its bets as investment services
Polymarket has approached the European Commission, ESMA and the FCA's chief executive to be regulated under MiFID, the Financial Times reports. Spain blocked it in May and France followed in July.
The Product Desk · Product desk
What happened
- Polymarket has been talking to regulators in the European Union and the UK to be treated as a financial services group instead of a gambling operator, the Financial Times reported.
- The company approached the European Commission and ESMA seeking regulation under MiFID, the EU's standardized rulebook for investment services.
- Its representatives also met Nikhil Rathi, chief executive of the UK's Financial Conduct Authority.
- Spain blocked both Polymarket and Kalshi in May while it investigates whether they can legally operate without a gambling license, and France ordered ISPs to cut local access to Polymarket in July.
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Why it matters
- constraint A company-level designation is the only route that scales for Polymarket, because every EU member state writes its own gambling law and it has not worked through licensing country by country.
- contradiction Polymarket is asking for one label for the firm, while the FCA has already sorted prediction markets by what the contract is about. The UK outcome the reporting points to leaves two regulators in play.
- exposure The five insider-trading cases and the securities watchdog's own warning are evidence held by the same authorities now weighing the classification request.
- precedent Spain's open investigation covers Kalshi too, so whatever definition of a licensable bet Madrid settles on will bind a competitor that did none of this lobbying.
The person who hit a block page in Lyon this summer was not shopping for an investment service. They were putting money on an election or a football match, two of the things Polymarket lists alongside box-office openings and international conflicts [3].
What Polymarket wants is a label that attaches to the company. Each EU member state writes its own gambling law, so one investment-services classification would replace a country-by-country licensing problem with a single rulebook [6][5]. On the reported logic, it would also lift the Spanish and French blocks [2].
The FCA has already described a different way to cut it. The UK regulator said it can oversee prediction markets on "financial or certain climactic events", while markets on political outcomes and sports fall to the Gambling Commission [11]. That sorts by what the contract is about. Set it against Polymarket's own catalogue and the election and sports books stay with the gambling regulator whatever company-level label the firm gets [17].
ESMA has not sounded interested in helping. It warned that prediction markets are "rife with insider trading", and the Financial Times reports it is not keen to loosen EU rules for them [12]. The cases behind that line are recent: a Google employee, three political candidates and a White House staff member, five people caught in a few months [13][16].
Polymarket's advertising carries its own record. The company has allegedly been paying social media influencers to post fake betting videos as ads [14], and the Wall Street Journal reported that half of the "winning" bets in those videos would have lost in real life [15].
Kalshi appears in the reporting only as the other platform Spain blocked in May [8]. The account describes lobbying by Polymarket alone, and that is thin evidence for a MiFID designation becoming the template every rival copies [18].
For anyone shipping event contracts into Europe, the sort that matters happens market by market. The question for each contract is which single regulator's existing definition already covers it. A market on a financial or climate event falls one way under the FCA's wording; a market on a general election or a cup final falls the other [11]. Contracts that need two answers are the ones getting blocked, and a company-level designation still leaves them needing two [17].
What to watch
- Whether the European Commission or ESMA responds in public to the MiFID request.
- Spain's investigation closing, and whether it finds Polymarket and Kalshi needed gambling licenses.
- Any FCA move that splits one operator's markets between itself and the Gambling Commission.