European Lotteries Urge Regulatory Coherence for Prediction Markets

The landscape of online betting is changing rapidly, and one segment is increasingly drawing the attention of regulatory bodies: prediction markets. On September 30, 2026, The European Lotteries (EL) sent a clear message from Brussels to policymakers and authorities. The call is for a coherent regulatory approach to ensure that emerging products do not create gaps in consumer protection. At a time when betting on election outcomes or economic indicators is booming, the association sees a risk that providers could circumvent existing gambling laws through clever wording or the use of new technologies.

The core issue lies in the classification of so-called event contracts. These allow users to take positions on future events, which often resembles a classic bet. However, these products are frequently marketed as financial instruments, leading to jurisdictional disputes between financial market regulators and gambling authorities. The association emphasizes that the legal treatment of a product must depend on its characteristics and associated risks, not on the technology or terminology used in marketing.

Numbers and facts

In the official statement dated September 30, 2026, EL underlined that gambling policy in the European Union remains a national competence. This means that the legality of prediction markets must be assessed individually in each member state. Particularly relevant here is the Markets in Financial Instruments Directive, known as MiFID II. If an event contract is classified as a financial instrument, it falls under these EU-wide rules. However, EL clarifies that such a classification is not a free pass. Products declared as financial instruments can simultaneously fall under national gambling laws if they meet the relevant criteria.

A key player in this debate is the European Securities and Markets Authority (ESMA). In July, ESMA noted that certain prediction markets with binary payouts could be considered restrictive financial instruments, yet still leave room for national gambling regulations. This coordination is crucial, as countries like France, the Netherlands, and Spain have already taken restrictive action against platforms such as Polymarket. Furthermore, nine European regulatory authorities have launched a joint initiative to target unlicensed prediction markets, as these often lack deposit limits or cooling-off periods.

„Prediction markets are developing rapidly, and regulation should keep pace. EL’s position is simple: activities that present similar risks should be subject to similar safeguards. The focus should be on the nature of the product and activity, rather than the label or underlying technology attached to it."- Piet Van Baeveghem, Secretary General at The European Lotteries

Background

The rise of blockchain technology has intensified the situation. Many new platforms use Distributed Ledger Technology (DLT) or tokenization to offer their services. EL calls for technological neutrality in legislation. The fact that a bet is placed via a blockchain or uses smart contracts does not change its economic core. If the risk and process correspond to a bet, gambling law must apply. There is great concern that regulatory arbitrage could undermine the hard-won consumer protections established over years.

The anonymity and constant availability on crypto-based platforms without state control are particularly worrying for national lotteries. In this context, Piet Van Baeveghem explicitly welcomed ESMA's recognition that event contracts can also be bets within the meaning of national laws. This strengthens the position of national regulators seeking to protect the market from uncontrolled growth.

Why it matters for German players

For players in Germany, the legal situation is very strictly defined by the State Treaty on Gambling 2021 (GlüStV 2021). Prediction markets acting as bets on events fall under the jurisdiction of the Gemeinsame Glücksspielbehörde der Länder (GGL). This means a provider requires a German license and must be on the official whitelist. Without this permission, the offer is illegal in Germany. German customers benefit from massive protection measures at licensed providers, such as the cross-operator deposit limit of 1,000 euros per month, monitored via the LUGAS system.

Furthermore, a strict stake limit of 1 euro per spin applies to slots in Germany, and betting options are also regulated for sports. Prediction market platforms, which often require no limits or identity checks, violate these safety standards. Players using such illegal offers risk not only losing their money without legal recourse but also theoretically participate in unauthorized gambling. The demand for more coherence from European Lotteries ultimately supports the German path of allowing only strictly controlled and licensed offers to prevent gambling addiction and crime.

What it means for GGL-licensed casinos

For operators with a GGL license, the EL initiative signifies a potential strengthening of the legal market. If regulatory authorities across Europe work more closely together, it will become harder for unlicensed competitors to enter the market under the guise of financial products or crypto services. GGL-licensed casinos and betting providers already have to clear high hurdles regarding IT security and player protection. A unified approach against gray market providers secures fair competition and protects the investments of companies that adhere to German laws.