ESMA clarifies existing restrictions on binary options apply to event contracts amid rising prediction market activity in the EU.
The European Securities and Markets Authority (ESMA) reiterated that many prediction market event contracts are already prohibited for retail investors under EU rules. The reminder follows a surge in offerings and rapid growth of prediction markets, with binary options subject to national restrictions since 2018.
ESMA’s statement does not introduce new measures but highlights enforcement of existing bans. The regulator noted increased activity in the sector, prompting the clarification. Meanwhile, U.S. regulators and states remain locked in a legal dispute over whether prediction markets should be classified as gambling or federally regulated derivatives.
In the U.S., the Commodity Futures Trading Commission (CFTC) has asserted exclusive jurisdiction over event contracts, suing states and supporting platforms like Kalshi. Eleven states have taken legal action against prediction market operators, with Nevada and Arizona imposing temporary blocks or criminal charges.