ESMA Warns Prediction-Market Event Contracts Could Face EU Ban

Prediction markets allow investors to trade on the outcomes of events such as elections and economic data releases, often through yes-or-no contracts with fixed payouts that may legally qualify as binary options. The European Securities and Markets Authority, or ESMA, has pursued restrictions on retail sales since 2018. With Kalshi valued at $22 billion, product classification will determine whether such platforms can enter the EU market.

ESMA warned on July 3, 2026, that event contracts with binary outcomes and fixed payouts are subject to national bans on binary options if they qualify as financial instruments. They therefore cannot be marketed, distributed or sold to EU retail investors. Calling payouts “coupons” or “rewards” does not change that classification. Operators serving only professional or institutional clients must still obtain authorization under MiFID II.