European securities regulator ESMA warned that prediction market contracts offered in the European Union may already be covered by the Markets in Financial Instruments Directive II (MiFID II), meaning the 2018 retail restrictions on binary options could apply automatically. The July 3 statement said firms must determine whether the contracts qualify as financial instruments under MiFID II and whether national law classifies them as gambling activities, and the guidance applies to companies and national supervisors overseeing EU financial markets. Polymarket, the largest offshore prediction market platform, does not operate a licensed EU business, and other platforms such as Kalshi and Crypto.com are regulated by the U.S. Commodity Futures Trading Commission. No major prediction market provider currently holds an EU licence. Earlier actions included Spain’s consumer affairs ministry blocking Kalshi and Polymarket on May 26 for lacking gambling licences, and a June 19 joint warning from gambling regulators of nine European countries about unlicensed platforms ahead of the FIFA World Cup. In the United States, Kentucky filed a lawsuit against Polymarket and Kalshi last month, alleging illegal sports betting. ESMA said firms expanding into the EU must address both financial market rules and national gambling requirements to avoid enforcement actions similar to those taken by Spanish authorities. The clarification precedes any large‑scale EU launch of prediction market services and leaves open how national gambling laws will be applied.