Polymarket wants to be a financial institution, not a bookmaker, and it is taking the argument to the top of Europe's regulatory ladder. The prediction market platform has held discussions with regulators in London, Brussels and multiple EU jurisdictions, seeking to have its contracts treated more like derivatives under the Markets in Financial Instruments Directive rather than the gambling regimes that currently govern much of the category, per the Financial Times. The lobbying is organized: ESMA chair Verena Ross met two U.S.-based members of Polymarket's legal team in June, accompanied by an A&O Shearman lawyer and a Hanbury Strategy lobbyist, and Polymarket executives met UK Financial Conduct Authority chief executive Nikhil Rathi the following day. The company joined Blockchain For Europe this month and is talking to other industry groups. Its own statement is diplomatic boilerplate: "We are committed to engaging early and openly with policymakers and regulators as we grow our presence and expand globally."
Why MiFID status is the whole game for prediction markets
The classification fight is existential because the two regimes imply opposite businesses. Gambling licenses mean national regulators, blocked platforms, restricted marketing and, in France's case, actual enforcement: French authorities ordered internet providers to restrict access to Polymarket as an unauthorized gambling service, and in July the Czech Ministry of Finance ordered ISPs to block the platform after classifying it as an unauthorized internet game, a pattern retail users route around with VPNs and regulators count as a leak, not a market. MiFID status, by contrast, would make Polymarket a regulated investment firm operating across the single market, which is why the company is fighting for it while national gambling authorities in France, Germany and Italy maintain that prediction markets require local gambling licenses.
The complication Polymarket cannot lobby away is that MiFID treatment cuts both ways. ESMA's July guidance said firms offering event-based contracts must assess whether individual products qualify as financial instruments under MiFID II, depending on structure and underlying, and warned this month about insider trading risks in prediction markets. If event contracts are financial instruments, then existing EU restrictions on binary options for retail consumers may apply, meaning the very classification Polymarket wants could import the retail bans that have constrained the sector, a tension familiar from Europe's ongoing arguments about who should police crypto markets. The UK split is even stranger: the FCA considers contracts tied to financial events and certain climate outcomes inside its perimeter, while political and sports markets, a large share of Polymarket's volume, would fall to the Gambling Commission, and Britain has banned retail binary options since 2019 on speculation and consumer-harm grounds, though the FCA has held talks about reopening access to certain financial prediction products, with no consultation or timetable published.
The money behind the regulatory push
The lobbying surge is not happening in a vacuum; it is happening in the middle of a raise. Polymarket is discussing roughly $1 billion in new funding at a valuation above $20 billion, with a proposed round led by 1789 Capital, the firm linked to Donald Trump Jr., at a $21 billion valuation and contributing roughly $300 million, on top of its earlier $200 million. Intercontinental Exchange, the NYSE's parent, invested $1 billion in October 2025 and another $600 million in March 2026, and the U.S. operation runs through QCX, a CFTC-designated contract market acquired for the American relaunch. Investors at that valuation are not buying a gambling site; they are buying the financial-infrastructure story, which is precisely the classification Polymarket is lobbying Europe to accept, and the same institutional legitimacy drive behind Binance's pursuit of a European license despite regulatory friction.
What to watch
Three outcomes would define the market. First, a European license under MiFID for event contracts would set the template every rival, Kalshi included, would follow into the continent, and would resolve the patchwork where a political contract is contraband in Paris and a financial contract in Frankfurt's review queue. Second, ESMA's insider-trading warnings maturing into enforcement would be the first real test of whether prediction markets can live inside financial law rather than merely be reclassified into it, echoing the kind of unresolved middlemen questions that stalled crypto's own market-structure bill. Third, the FCA's informal talks turning into a consultation would reopen the UK, whose retail binary-option ban is the exact provision Polymarket's model brushes against. The base case is slow: classification fights at EU level take years, and gambling regulators do not surrender jurisdiction politely. But the direction is set, and $21 billion of valuation depends on it: prediction markets are asking to be treated as financial markets, and Europe is now formally deciding whether to say yes.
