EU Regulator Warns Prediction Markets May Face Retail Binary Options Ban

Prediction markets allow users to wager through contracts on the outcomes of elections, sporting contests and other events, but they may be treated as regulated gambling in the Netherlands. The Dutch Gambling Authority (Ksa) blocked Polymarket in February 2026 for operating without a gambling license, highlighting the challenges of cross-border enforcement and investor protection involving decentralized platforms.

An investigation by Dutch financial newspaper FD found that, as of May 5, 2026, users in the Netherlands could still trade prediction contracts through Kalshi, Hyperliquid and Interactive Brokers. Hyperliquid has also recently expanded its local services. The Ksa warned that similar platforms could face penalties, while an April study by London Business School found that only 3% of participants were consistently profitable and nearly 70% lost money.

Prediction markets let traders take positions on outcomes ranging from sports contests to elections. Their rapid expansion has put the Commodity Futures Trading Commission at the center of a jurisdictional fight over whether event contracts are federally regulated derivatives or gambling subject to state oversight. For CFTC-regulated designated contract markets, self-certification can speed listings, but exchanges must still show that each product complies with the Commodity Exchange Act, settlement rules and core principles.

The CFTC’s Division of Market Oversight issued its latest advisory on July 24, warning platforms including Kalshi, Coinbase, Polymarket and Crypto.com against broad, template-style filings that combine many contract permutations. Each proposed variation must include its terms, underlying commodity, settlement methodology, data sources and compliance analysis under Regulation 40.2, the agency said. The notice was the regulator’s second warning in several months, following guidance on March 12, though closely related contracts may still be certified as a class.