European Lotteries Calls for Coherent Regulation of Prediction Markets

^{The European Lotteries association, based near the EU institutions in Brussels, has called for coherent regulation of prediction markets across Europe. (Photo: Ank Kumar / Wikimedia Commons)}

The European Lotteries association has called for a coherent regulatory approach to prediction markets, warning that gaps between financial and gambling rules could weaken consumer protections as the products grow across Europe.

In a press statement issued from Brussels, the European Lotteries (EL), which represents national lottery and gambling operators in 41 European countries, said event contracts should be classified by their legal characteristics, economic substance and risk, rather than by their marketing name or the technology behind them.

EL Says Financial Rules Don't Cancel Out Gambling Law

Under current EU rules, event contracts that qualify as financial instruments fall under the Markets in Financial Instruments Directive (MiFID II). The EL said qualifying as a financial instrument does not by itself exempt a product from national gambling law, a distinction regulators elsewhere have already had to enforce when a product's substance looks like gambling.

"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, EL Secretary General.

Van Baeveghem also welcomed a recent statement from the European Securities and Markets Authority (ESMA) recognising that event contracts may also constitute betting under national gambling law, calling it evidence of the need for closer coordination between financial and gambling regulators.

Four Principles for Policymakers

The EL set out four principles it wants policymakers to follow: basing classification on a product's characteristics and risk rather than its name; preserving states' authority to regulate gambling within their own territories; ensuring new technologies such as blockchain and tokenisation create no exemptions from existing rules; and close coordination between financial and gambling regulators.

Because gambling regulation remains a national competence in the EU, the EL statement said the legality of prediction markets must still be assessed jurisdiction by jurisdiction, even as it pushes for more consistent enforcement across EU member states.

The press statement draws on a longer EL position paper published alongside it, which argues that gambling policy is deeply rooted in national legal frameworks, public policy objectives, consumer-protection standards and market structures that vary significantly between member states, making coordination between regulators harder than a single EU-wide rulebook might suggest.

The European Lotteries describes itself as the largest and most representative lottery and gambling body in Europe, with 71 members across 41 countries, including all EU member states. Its members operate only where they hold a state licence and say they comply with anti-money-laundering and responsible-gaming requirements in each market. The statement was issued by EL secretariat staff in Brussels and credited to communications officer Lucy Lenaers-Mathieson as the contact point for further queries.