PARIS, July 3, 2026 — The European Securities and Markets Authority (ESMA) has reminded firms offering prediction markets, also known as event contracts, to assess whether their products fall within existing national product intervention measures on binary options where they qualify as financial instruments, as the growing popularity of such products and increasing retail participation draw greater regulatory attention.
The statement comes as prediction markets continue to gain traction globally. ESMA said event contracts are products with binary financial outcomes, paying either a fixed amount or nothing depending on the answer to a yes-or-no question about a future event. Whether an event contract qualifies as a financial instrument depends on the underlying event question. Where it does, the product is classified as a derivative.
Existing binary options measures
According to ESMA, firms must assess whether event contracts fall within the scope of existing national product intervention measures based on the specific characteristics of each product. The authority said event contracts with binary outcomes and binary pay-outs are likely to be derivatives that qualify as financial instruments and are therefore likely to fall within those measures.
The national measures, adopted by EU national competent authorities following ESMA’s 2018 temporary product intervention on binary options, prohibit the marketing, distribution or sale of in-scope binary options to retail clients.
ESMA also stressed that a product’s commercial name, including “event contract,” is irrelevant to its regulatory classification under the Markets in Financial Instruments Directive (MiFID II). Instead, firms must conduct a careful legal analysis of a product’s characteristics to determine whether the product intervention measures apply.
Investment firm authorisation
The authority also reminded firms that providing investment services or activities involving event contracts that qualify as financial instruments requires authorisation under MiFID II, regardless of the category of clients receiving those services. As a result, distributing such event contracts exclusively to non-retail clients also requires investment firm authorisation.
ESMA further noted that some event contracts may qualify as bets under national gambling legislation. Separately, crypto-assets in token form that do not qualify as financial instruments may instead fall within the scope of the Markets in Crypto-Assets Regulation (MiCA).
Why it matters
The statement clarifies ESMA’s supervisory expectations regarding the application of existing EU financial services rules to prediction markets and other event contracts. Rather than introducing new requirements, the authority emphasized that firms should determine whether existing legislation already applies by assessing each product’s legal characteristics.
For crypto platforms exploring tokenised prediction markets or blockchain-based event contracts, the statement reinforces that regulatory treatment depends on a product’s legal characteristics rather than its marketing description. Depending on a product’s structure, firms may need to consider MiFID II, national binary options measures, investment firm authorisation requirements or, where applicable, MiCA.
