Lobbying | Financial Regulation | Market Access

By Frank Farnel | Responsible Public Affairs | September 28, 2026

Polymarket’s European campaign is not simply asking for lighter rules. It is asking public authorities to decide that an event contract belongs to finance rather than gambling. That choice determines the regulator, the license, the safeguards, the customer base and, ultimately, whether the business can operate at scale.

Executive Summary

• The most consequential lobbying contest may occur before any rule is written: the contest over what an activity legally is. Classification determines which statute applies, which authority has jurisdiction and which protections or prohibitions follow.
• Prediction markets make this visible. A binary contract on an election, an interest-rate decision or a sporting result can resemble a derivative, a bet, a crypto-asset or a new category. The label is not chosen by marketing. It depends on legislation, product design, the referenced event and the regulator’s interpretation.
• Polymarket announced on September 9 that it had joined Blockchain for Europe, and the Financial Times reported on September 22 that the company was seeking financial-services treatment in the European Union and United Kingdom. Yet European and British financial regulators have warned that classifying some event contracts as financial instruments does not necessarily open the retail market. It may bring them inside existing binary-options prohibitions.
• France has taken a gambling-law route and ordered internet providers to block Polymarket. The United States has placed federally regulated event contracts under the Commodity Futures Trading Commission, while states continue to litigate under gambling law. Gibraltar created a bespoke prediction-market regime under gambling legislation. These are four different answers to the same perimeter problem.
• Responsible classification lobbying should not argue from commercial preference to legal conclusion. It should demonstrate the product’s economic function, confront the risks that follow from the preferred category, offer enforceable safeguards and disclose the interests seeking the change.

The Most Valuable Definition in the Business Plan

Executives tend to think of regulation as a set of obligations imposed after the business model has been designed. In emerging markets, the sequence often runs the other way. Before an authority decides how an activity should be regulated, it must decide what the activity is.

That decision is the regulatory perimeter. Inside one perimeter, a company may be an investment firm offering derivatives. Inside another, it may be a gambling operator. Somewhere else, the same activity may be treated as a crypto-asset service, a communications platform, a medical device, a transport service or an entirely new statutory category. Each classification carries a different licensing path, supervisory culture, capital requirement, consumer-protection model, enforcement toolkit and political constituency.

This is why classification is an increasingly important form of lobbying. The company is not merely asking whether a proposed rule should contain a higher threshold or a longer transition. It is asking which rulebook, institution and policy tradition should govern the market.

Prediction markets now provide an unusually clear case. Their contracts usually pay a fixed amount if a defined future event occurs and nothing if it does not. Users can often buy and sell positions before resolution. That structure can look like a binary derivative. When the event is a football result or an election, it can also look like betting. If the contract is represented by a token, digital-asset law may enter the analysis. And when market prices are presented as aggregated probabilities, platforms can argue that they produce socially valuable information rather than merely entertainment.

On September 9, Polymarket announced that it had joined the Brussels-based association Blockchain for Europe to support its European expansion and to advocate for a consistent regulatory framework.[1] On September 22, the Financial Times reported that the company was meeting European and British authorities and making the case for treatment under financial-services law rather than a country-by-country patchwork of gambling rules.[2] The campaign is timely, commercially rational and legitimate. It is also difficult, because the preferred financial classification may activate restrictions rather than remove them.

That paradox is the central lesson. Winning the category does not mean escaping regulation. It means accepting the complete logic of the category—including its burdens.

The Perimeter Test: Five Questions Before the Lobbying Begins

The public-affairs team needs a framework that is more demanding than “innovation versus red tape.” A classification campaign should pass five tests: Substance, Statute, Supervisor, Safeguards and Spillover.

1. Substance: What economic activity actually occurs?

The first question is functional. Who pays whom? What creates the return? Can the position be resold? Is the product used to hedge a measurable exposure, to express a speculative view or primarily to entertain? Who determines settlement, and can a participant influence the outcome?

A persuasive campaign starts with transaction architecture, not a preferred label. Calling a product a “market” does not make it a financial instrument. Calling it a “forecast” does not remove the wager. Conversely, the presence of speculation does not automatically make a contract gambling; speculation exists throughout regulated financial markets.

2. Statute: Which legal definition captures the activity?

Legal categories are created by legislation and interpreted by courts and regulators. The argument must therefore connect product characteristics to the actual words, purposes and precedents of the statute. In the European Union, the referenced event matters because only event contracts linked to an underlying listed in Section C(4)–(10) of Annex I to MiFID II qualify as financial instruments under ESMA’s July 2026 statement.[3] A contract can also qualify as a bet under national law, and a token that is not a financial instrument may fall within MiCA.

The possibility of overlap is crucial. Public-affairs language often assumes that classification is a choice between mutually exclusive boxes. The law may instead impose concurrent regimes or assign different contracts on the same platform to different authorities.

3. Supervisor: Which institution has competence and capacity?

Venue matters. Financial regulators think in terms of market integrity, disclosure, suitability, capital and systemic risk. Gambling regulators focus on licensing, addiction, minors, game integrity and responsible-play controls. Consumer agencies, data authorities, prosecutors and competition authorities may also have jurisdiction.

Institutional mandates are not interchangeable. Academic work on regulatory venue shopping shows that firms with cross-border operations have incentives to engage multiple regulatory venues, particularly when jurisdictions overlap.[4] That is a description of strategy, not proof of improper conduct. The integrity question is whether the company is seeking the authority best equipped to address the activity or merely the forum most likely to accept its preferred conclusion.

4. Safeguards: What obligations follow from the preferred category?

A company that asks to be treated as a market must be prepared to operate like one. That may mean surveillance, conflict controls, customer identification, reporting, capital, auditability, objective settlement and enforcement against insider trading. A company seeking a gambling license must accept age verification, responsible-play measures, advertising limits and national product restrictions.

The safeguards test reveals whether the campaign is principled. If the company wants the reputational legitimacy and market access associated with financial regulation but resists the corresponding controls, the argument is incomplete.

5. Spillover: What precedent does the category create?

Regulators do not decide only for the applicant in front of them. A classification can apply to competitors, adjacent technologies and products not yet designed. It can shift authority between agencies, change tax revenues and weaken or strengthen national rules. It may also travel across borders.

The public-affairs case must therefore answer a question businesses often prefer to avoid: if every comparable operator received the requested treatment, would the resulting system remain coherent and defensible?

Case One: Europe—A Financial Category That May Still Close the Door

Polymarket’s European argument arrives after regulators have already published a cautious interpretation.

On July 3, the European Securities and Markets Authority issued a public statement on event contracts. ESMA said that not every event contract is a financial instrument. The answer depends on the underlying question. Where a contract does qualify as a financial instrument, however, it is a derivative; because the payoff is binary, existing national product-intervention measures prohibiting the marketing, distribution or sale of binary options to retail clients apply.[3]

This produces a result that should interest every lobbyist working on classification. The financial-services category can be legally sophisticated and commercially restrictive at the same time. It could replace fragmented gambling analysis with a harmonized European framework, yet still prevent the retail distribution on which platform scale depends.

ESMA reinforced its concerns on September 10 in its second risk-monitoring report of 2026. The regulator identified prediction markets as a subject requiring attention and highlighted market-manipulation and insider-trading risks, especially where crypto-based participation makes conduct harder to detect.[5] That analysis arrived twelve days before the reported lobbying campaign became public.

The sequence changes the advocacy task. It is not enough to argue that event contracts resemble derivatives. ESMA has already accepted that some do. The harder question is why retail access should be reconsidered despite the risks that led to the binary-options intervention.

That requires evidence on market design, not only legal taxonomy: customer-loss distributions, concentration, suspicious-trading detection, settlement disputes, age and identity controls, inducements, interface design and the practical value of the information generated. It also requires a product-by-product argument. A weather contract used to hedge business exposure may raise different questions from a market on whether a named person will use a particular word.

The lobbying opportunity remains real because institutions revisit perimeters as markets evolve. But the campaign cannot begin from the premise that a new name neutralizes the reason an older rule exists.

Case Two: France—The Gambling Classification Becomes an Access Decision

France demonstrates the immediate commercial force of the alternative category.

In February 2026, the Autorité nationale des jeux stated that prediction-market platforms were not authorized in France and were considered illegal gambling services. The authority acknowledged the hybrid character of the model: contracts resemble bets because users stake money on events, while resale and price formation can resemble specialized financial products.[6]

On July 16, the ANJ ordered French internet providers to block Polymarket. The regulator said an earlier geoblocking measure had been circumvented. It reported 578,751 visits and 205,057 unique visitors to the site from France in June 2026. The ANJ also pointed to the absence of sufficient identity controls on the platforms available to French and European users and recalled that promoting unauthorized gambling can attract a fine of €100,000.[7]

These figures are authority-reported web-traffic measures, not audited customer counts. They nevertheless explain why classification matters to market access. Once the ANJ treated the service as unauthorized gambling, the issue was no longer an abstract definitional dispute. It became a blocking decision, an advertising risk and a compliance obligation for intermediaries.

From a lobbying perspective, France is also a warning against arguing only at the European level. Gambling law remains national. Even if a platform persuaded EU financial authorities that some contracts belong inside MiFID II, political, sporting and cultural contracts might remain within national gambling regimes. One platform could face different categories for different products, or overlapping supervision for one product.

The failed approach would be to present fragmentation itself as evidence that national regulators are wrong. Fragmentation may be costly, but cost does not resolve jurisdiction. A stronger case would identify the specific regulatory objective—identity verification, addiction prevention, market integrity or cross-border consistency—and show which institution can enforce it most effectively.

Case Three: The United Kingdom—A Split Perimeter in Plain Language

The United Kingdom has stated the perimeter with unusual clarity. The Financial Conduct Authority’s 2026 perimeter report says that prediction-market products tied to non-financial events, including sporting and political outcomes, fall under the Gambling Commission. Products referencing financial or certain climatic events fall within the FCA perimeter. The FCA’s current view is that the financial products it has seen are binary options and therefore subject to the permanent retail ban.[8]

The authority also said it would consider whether to do further work on consumer access or clarify the perimeter. That creates a legitimate opening for evidence-based engagement, but not a presumption of liberalization.

The British model reveals three practical realities.

First, the regulator may classify the contract rather than the platform. A company cannot necessarily obtain one institutional identity for every market it offers.

Second, a split perimeter increases coordination costs. Product, legal and public-affairs teams must map the underlying event, customer, marketing method and distribution channel before launch. A political contract cannot borrow the financial status of a contract tied to an interest-rate decision merely because both use the same interface.

Third, the policy debate is about access as much as classification. The FCA made its permanent binary-options ban in 2019 because it considered the products speculative, gambling-like and capable of producing consumer harm.[9] A credible lobbying campaign must answer that record directly. It cannot simply replace “binary option” with “prediction market” and assume the prior evidence disappears.

Case Four: The United States and Gibraltar—Two Different Ways to Build a Market

The United States: federal recognition, state resistance and active enforcement

The United States offers the industry’s strongest example of financial-market treatment. The CFTC describes event contracts as products typically structured as swaps and explains that they may be used to hedge economic risk or speculate on outcomes.[10] Federally regulated platforms operate as designated contract markets.

Yet classification has not ended the jurisdictional dispute. In April 2026, the CFTC sued Wisconsin after the state brought actions against five federally regulated prediction-market companies under state law. The Commission argued that Congress had granted it exclusive jurisdiction over event contracts traded on designated contract markets and listed related litigation involving Arizona, Connecticut, Illinois, New York and Massachusetts.[11]

The American outcome is therefore not “finance won.” It is an institutional struggle between federal derivatives regulation and state gambling authority. A favorable federal venue can create commercial scale while producing litigation elsewhere.

Financial classification has also brought financial enforcement. On August 28, the CFTC ordered a former White House teleprompter operator to disgorge $107,539.02 in profits and pay a $65,000 civil penalty for trading event contracts using nonpublic information about words expected in presidential speeches. The order imposed a three-year trading ban.[12] On September 22, the CFTC issued a further advisory on “mention markets,” warning that contracts settled by a person’s words, attendance or interaction present heightened manipulation risk when the conduct is not independently generated or externally verifiable.[13]

This is the obligation side of the industry’s preferred category. If event contracts are markets, inside information, manipulation, surveillance and product governance are not peripheral concerns. They are central.

Gibraltar: create a category instead of choosing between two

Gibraltar took a different route. Its Prediction Market Regulations 2026, made under the Gambling Act 2025, came into force in July. The jurisdiction established a specific licensing framework rather than relying entirely on inherited categories.[14] Earlier, the government disclosed that it had issued a prediction-market license and described the sector as a potential source of economic diversification.[15]

A bespoke regime can be attractive because it allows the legislature to match obligations to the product rather than stretch an old definition. It can also become regulatory competition: a jurisdiction designs a category partly to attract operators and investment.

That does not make the model inherently weak. Tailored regulation may be more coherent than forcing a hybrid product into rules written for a casino or a conventional exchange. But credibility depends on the substance of licensing, supervision, cross-border cooperation and enforcement. A new category should not become a gap with a title.

What the Cases Reveal About Classification Lobbying

The comparison shows that the same commercial model can encounter four different public-law architectures:

Jurisdiction	Regulatory approach	Immediate consequence	Lobbying challenge
European Union	Some event contracts can be MiFID II derivatives; financial classification triggers binary-options restrictions for retail clients	Financial status does not automatically create retail access	Demonstrate why safeguards justify revisiting product intervention, not merely why contracts resemble derivatives
France	Prediction platforms treated as unauthorized gambling	Site blocking, promotion risk and national enforcement	Address national gambling objectives and effective geolocation rather than relying only on EU financial-law arguments
United Kingdom	Split perimeter based on the underlying event	Financial and climatic contracts may fall to the FCA; political and sports contracts to gambling regulation	Build product-level classification and consumer-protection cases
United States	Federal derivatives regulation contested by states	National scale alongside continuing jurisdictional litigation and market-conduct enforcement	Defend federal competence while proving market integrity
Gibraltar	Bespoke prediction-market regime under gambling legislation	A dedicated licensing route	Show that tailored rules deliver credible supervision rather than regulatory arbitrage

The first lesson is that classification is not branding. The regulator looks through the company’s vocabulary to the payoff, customer, underlying event, distribution and risk.

The second is that every category has a policy history. Binary-options rules exist because authorities documented consumer losses and harmful distribution practices. Gambling restrictions exist because governments have made judgments about addiction, minors, integrity and permitted products. Lobbying must engage with those reasons.

The third is that favorable classification creates a governance burden. The United States has not simply legitimized prediction markets; it has applied derivatives enforcement to them. The CFTC’s insider-trading order and mention-market advisory are evidence of a market framework becoming operational.

The fourth is that the strongest campaign may seek a new category, but bespoke legislation raises its own integrity test. A new regime should specify the risks it solves, the powers of the supervisor, the obligations of operators and the route for redress. Otherwise, “innovation-friendly” becomes another term for an unexamined exemption.

What Lobbying Leaders Should Do Now

1. Map the perimeter before choosing the message. Build a jurisdiction-by-product matrix showing the underlying event, legal definition, responsible authority, licensing status, customer restrictions and potential overlap. Do not let the corporate narrative outrun the legal map.
2. Argue from function, not from the preferred label. Explain the transaction, the source of return, resale, settlement and customer use. Regulators distrust campaigns that begin with a conclusion and reverse-engineer the product description.
3. Carry the obligations with the category. If the company seeks financial-market treatment, specify surveillance, conflict, disclosure, KYC, capital and enforcement controls. If it seeks gambling authorization, show age verification, responsible-play design, marketing limits and location controls.
4. Segment the product portfolio. Political, sports, weather and macroeconomic contracts may not belong in the same legal box. A single all-or-nothing classification request can be less credible than a controlled path beginning with products that have demonstrable hedging or informational value.
5. Prepare the fallback architecture. The preferred classification may fail or produce a retail prohibition. Boards should know whether the business can operate institutionally, under national gambling licenses, in a bespoke regime or with a narrower product set.
6. Engage every authority with a plausible claim. European financial advocacy cannot substitute for national gambling analysis. Federal recognition does not extinguish state litigation. Data, consumer, competition and criminal authorities may still enter the picture.
7. Make the coalition transparent. Trade-association membership can broaden expertise and access, but it should not obscure who benefits from the requested change. The OECD’s 2024 recommendation calls for transparency and integrity by companies and associations engaged in lobbying and influence.[16]
8. Offer a review mechanism. When evidence is incomplete, advocate for a time-limited authorization, product boundary, reporting duty and published evaluation. A reversible decision is easier to defend than an irreversible reclassification based on forecasts.

Conclusion: A Category Is a Public Commitment

Prediction markets expose something that is true across the regulated economy. The border between categories is not a technical afterthought. It is where commercial models meet public purposes.

For the company, the category determines access, cost and scale. For the state, it determines which risks are visible, which authority is accountable and which citizens receive protection. For competitors, it can determine whether one model gains a structural advantage. For the public, it shapes whether an activity is understood as investment, consumption, medicine, transport, information or gambling.

That is why classification lobbying deserves senior attention. The decision is too important to be left to slogans about innovation, and too political to be treated as a narrow legal exercise. Public affairs must connect law, operational evidence, institutional competence and legitimacy.

Polymarket may or may not persuade European authorities to alter the perimeter. The campaign has already made the strategic issue visible: the most valuable regulatory victory is sometimes not a favorable clause. It is the definition that decides which clauses apply.

Key Evidence

• July 3, 2026: ESMA stated that event contracts qualifying as financial instruments are derivatives and fall within national binary-options measures prohibiting retail marketing, distribution or sale.[3]
• 578,751 visits and 205,057 unique visitors: traffic from France to Polymarket reported by the ANJ for June 2026 before its July blocking order; these are authority-reported web metrics, not audited customer totals.[7]
• €100,000: the potential fine cited by the ANJ for promoting unauthorized betting or gambling services in France.[7]
• $172,539.02: disgorgement and civil penalty imposed by the CFTC in August 2026 for misuse of nonpublic government information in event-contract trading; the order also imposed a three-year trading ban.[12]
• September 22, 2026: the CFTC warned that “mention markets” present heightened manipulation risks when settlement depends on a person’s conduct that may not be independently generated or externally verifiable.[13]

Glossary

Binary optionA contract with a fixed payout if a specified event occurs and no payout if it does not. European and British authorities prohibit retail distribution of covered binary options.Designated contract market (DCM)A board of trade registered with the US CFTC and subject to statutory core principles for market operation and integrity.Event contractA contract whose value or payout depends on the outcome of a specified event.MiFID IIThe principal European Union directive governing markets in financial instruments and investment services.Product interventionA regulatory measure restricting or prohibiting the marketing, distribution or sale of a financial product because of investor-protection or market concerns.Regulatory perimeterThe legal boundary determining which activities, products and actors fall within a regulator’s jurisdiction.Regulatory venue shoppingStrategic engagement with different institutions or jurisdictions capable of deciding the same or overlapping policy question.

References and Further Reading

Official and Primary Sources

1. Polymarket, Polymarket Joins Blockchain for Europe to Support Expansion into Europe, company announcement, September 9, 2026.
2. European Securities and Markets Authority, Public Statement on the Application of National Product Intervention Measures on Binary Options to Event Contracts, ESMA35-243228190-8148, July 3, 2026.
3. European Securities and Markets Authority, Ongoing Geopolitical and Economic Vulnerabilities Masked by Strong Investor Optimism, September 10, 2026.
4. Autorité nationale des jeux, Prediction Market Platforms: Illegal in France and Potentially Risky to Users, February 25, 2026.
5. Autorité nationale des jeux, Promotion of Illegal Gambling Services: Blocking of the Polymarket Website, July 17, 2026.
6. Financial Conduct Authority, FCA Perimeter Report 2025/26—Prediction Markets, published March 2026, accessed September 28, 2026.
7. Financial Conduct Authority, PS19/11: Product Intervention Measures for Retail Binary Options, March 29, 2019.
8. US Commodity Futures Trading Commission, Understanding Prediction Markets and Event Contracts, accessed September 28, 2026.
9. US Commodity Futures Trading Commission, CFTC Sues Wisconsin to Reaffirm Its Exclusive Jurisdiction over Prediction Markets, April 28, 2026.
10. US Commodity Futures Trading Commission, CFTC Orders Gabriel Perez to Pay $172,000 for Insider Trading of Mention Market Event Contracts, August 28, 2026.
11. US Commodity Futures Trading Commission, CFTC Releases Staff Advisory on Mention Markets, September 22, 2026.
12. Government of Gibraltar, Prediction Market Regulations 2026, Legal Notice 2026/176, July 13, 2026.
13. HM Government of Gibraltar, Minister Feetham Speaking Notes for the Gambling (Amendment) Bill 2026, April 1, 2026.
14. OECD, Recommendation of the Council on Transparency and Integrity in Lobbying and Influence, OECD/LEGAL/0379, revised May 3, 2024.

Academic and Analytical Sources

15. David Coen, Mattia Guidi, Nikoleta Yordanova and Adrienne Héritier, The Logic of Regulatory Venue Shopping: A Firm’s Perspective, Public Policy and Administration, Vol. 36, No. 2, 2021, pp. 147–167.
16. Julia Black, Regulatory Conversations, Journal of Law and Society, Vol. 29, No. 1, March 2002, pp. 163–196.
17. Filippo Annunziata and Thomaz de Arruda, Prediction Markets between the United States and the European Union: A Comparative Analysis of the Legal Classification of Event Contracts, SSRN working paper, July 2026.

Authoritative Reporting Consulted

18. Financial Times, Polymarket Presses Europe to Treat Its Bets as Financial Products, September 22, 2026.

Source and Methodology Note

Research was completed on September 28, 2026, with a cut-off of 7:30 a.m. Central European Summer Time. The article prioritizes legislation, regulator statements, enforcement orders, official reports and corporate primary material. The Financial Times was used for non-public details of Polymarket’s reported meetings with European and British authorities; those meetings are attributed to the newspaper rather than treated as independently verified. Polymarket’s association membership and stated policy position come from its own announcement and are identified as corporate claims.

The article distinguishes legal classification from commercial description. It does not assume that every contract on a platform receives the same treatment. EU, British, French, US and Gibraltar frameworks are compared for analytical purposes but are not legally interchangeable. The ANJ traffic figures are regulator-reported web analytics, not verified active-customer counts. The CFTC’s litigation statements express the Commission’s jurisdictional position; the existence of litigation means some questions remain contested.

The five-part Perimeter Test—Substance, Statute, Supervisor, Safeguards and Spillover—is the author’s analytical framework. It does not purport to replace legal advice. No claim is made that a particular private lobbying intervention caused a regulatory decision unless the formal record establishes that connection.

Suggested Internal Links

• The Test Becomes the Argument: How Regulatory Sandboxes Are Changing Lobbying — on supervised evidence and the integrity risks of regulator–industry learning.
• The Law Has Passed. The Public Affairs Campaign Has Not — on influence during implementation and regulatory interpretation.
• Your Trade Association May Be Lobbying Against You — on coalition governance and accountability.
• Unlocking Market Access Through Public Affairs Strategy — on integrating regulatory, political and commercial strategy.

Hashtags: #Lobbying #FinancialRegulation #PublicAffairs