ESMA Clarifies EU Retail Ban Applies to Prediction Markets

Binary options have been effectively banned for retail investors across the EU since 2018. ESMA introduced a temporary intervention that year. Member-state regulators subsequently made it permanent through their own national measures.

ESMA also noted that event contracts that are tokenized and do not qualify as financial instruments may instead fall under the EU's Markets in Crypto-Assets (MiCA) framework. That carries its own authorization and disclosure requirements. Some event contracts could also fall under national gambling law, depending on how a given member state treats them.

ATH21 chief executive Cris Carrascosa said on social media that the statement was less a new restriction than a reminder of the existing law's reach. The real difficulty for firms, he argued, lies in the upfront, case-by-case analysis of a product's actual characteristics rather than its label.

For platforms with European ambitions, ESMA has narrowed the options. They can restructure products so they fall outside financial-instrument classification. They can obtain MiFID II authorization. Or they can accept that the EU retail market stays closed unless further compliance moves are made.