Head to Polymarket’s US website and you will be greeted with crystal-ball trades on everything from the midterm elections to the likelihood of a fully reopened Strait of Hormuz. Try that in France, and you will see something very different: Sober black-on-white text under the words, “Illegal website.”

That’s because in France and other European countries, regulators see prediction markets run by Polymarket and its rival Kalshi as unregulated gambling that dodges the safeguards and oversight of licensed platforms. They also fret, justifiably, about the harm to people from losing money on an addictive, easily manipulated 24x7 market.

In April, big bets on the temperature in Paris coincided with suspected weather sensor-tampering at the country’s largest airport. By July, France blocked Polymarket’s site and teamed up with other national watchdogs to warn against prediction markets. The US company is contesting the ban.

This may sound familiar, given Brazil’s crackdown on these sites and New York’s recent lawsuit accusing Polymarket of illegal gambling. But the firm is betting on a new path to regulatory acceptance in Europe by going around gambling watchdogs and engaging directly with financial supervisors from the Paris-based European Securities Markets Authority (ESMA) and the UK Financial Conduct Authority.

The idea is to convince them that this is a derivatives market, not a gambling one, and should be regulated as such rather than banned. This would mirror its US setup, where prediction markets are overseen federally by the Commodity Futures Trading Commission—even as American states argue that these are sports-betting sites and should fall under their purview.

This is a bold wager. Polymarket has the cash and lobbying heft to get its foot in the door after a $1 billion funding round led by Donald Trump Jr’s venture-capital firm. It may sway some technocrats by pointing to financial-market bets on its platform where the underlying market is regulated, such as currencies or commodities.

ESMA already regulates so-called binary options—a derivative that pays out if a yes-or-no outcome is met. And it has floated the idea that some prediction-market contracts fit this category.

Neal Kumar, Polymarket’s chief legal officer, says his business wants “a regulated pathway in Europe for this new asset class.” The firm also sent me poll results from a London firm that found 90% of finance professionals reckoned prediction-market data could inform their trading decisions.

Still, one hopes regulators will think hard before accepting what looks like the thin end of a fat wedge. Even before Polymarket and Kalshi, binary options have blurred the lines between investing and betting because of their coin-toss, speculative nature. Most folks lose money on them and they are still deemed too risky for retail investors in the European Union (EU). In Britain, they were once labelled gambling products.

Opening the door to more of these via Polymarket feels like an unnecessary step into the unknown. ESMA’s approval could be misinterpreted as a green light for the company and its industry, even if it covered only a narrow subset of what’s out there.

As for the argument about treating sports predictions as a derivatives market, good luck with winning that debate in Europe. Sports bets, which account for 80% of prediction markets’ onshore activity, don’t fit the financial-supervision mould. Their oversight is also better established in Europe than in the US.

As for the racier trades, from wagering on declarations of war or Christ’s second coming, no number of claims of “informational value” will be fully persuasive. This stuff can create incentives for corrupt, illegal or dangerous actions to rig the outcome, as a recent paper co-authored by Bocconi University’s Luis Enriques explains.

But France-style bans are not the last word. It’s hard to get the EU’s 27 members to agree on regulation. Malta has gone it alone on crypto rules to bring in the industry’s money. And in a world where every few years brings a new form of casino finance, it’s worth sketching out workable regulation besides prohibition. Jackson Gutenplan, a Bloomberg Intelligence analyst, says one endpoint for prediction markets could be strictly regulating trades around politics, climate or corporate events.

But that’s a long-term challenge that doesn’t address the central issue today: that Polymarket [activity] still looks more like gambling than investing. The problem is both the speculative element and that the deck is stacked against the consumer, a former senior regulatory official tells me.

Country bans create their own difficulties and loopholes, but it still looks like the riskier punt would be rushing to give this market a regulatory blessing. Supervisory dice rolls can wait. ©Bloomberg

The author is a Bloomberg Opinion columnist writing about the future of money and the future of Europe.

Head to Polymarket’s US website and you will be greeted with crystal-ball trades on everything from the midterm elections to the likelihood of a fully reopened Strait of Hormuz. Try that in France, and you will see something very different: Sober black-on-white text under the words, “Illegal website.”

That’s because in France and other European countries, regulators see prediction markets run by Polymarket and its rival Kalshi as unregulated gambling that dodges the safeguards and oversight of licensed platforms. They also fret, justifiably, about the harm to people from losing money on an addictive, easily manipulated 24x7 market.

In April, big bets on the temperature in Paris coincided with suspected weather sensor-tampering at the country’s largest airport. By July, France blocked Polymarket’s site and teamed up with other national watchdogs to warn against prediction markets. The US company is contesting the ban.

This may sound familiar, given Brazil’s crackdown on these sites and New York’s recent lawsuit accusing Polymarket of illegal gambling. But the firm is betting on a new path to regulatory acceptance in Europe by going around gambling watchdogs and engaging directly with financial supervisors from the Paris-based European Securities Markets Authority (ESMA) and the UK Financial Conduct Authority.

The idea is to convince them that this is a derivatives market, not a gambling one, and should be regulated as such rather than banned. This would mirror its US setup, where prediction markets are overseen federally by the Commodity Futures Trading Commission—even as American states argue that these are sports-betting sites and should fall under their purview.

This is a bold wager. Polymarket has the cash and lobbying heft to get its foot in the door after a $1 billion funding round led by Donald Trump Jr’s venture-capital firm. It may sway some technocrats by pointing to financial-market bets on its platform where the underlying market is regulated, such as currencies or commodities.

ESMA already regulates so-called binary options—a derivative that pays out if a yes-or-no outcome is met. And it has floated the idea that some prediction-market contracts fit this category.

Neal Kumar, Polymarket’s chief legal officer, says his business wants “a regulated pathway in Europe for this new asset class.” The firm also sent me poll results from a London firm that found 90% of finance professionals reckoned prediction-market data could inform their trading decisions.

Still, one hopes regulators will think hard before accepting what looks like the thin end of a fat wedge. Even before Polymarket and Kalshi, binary options have blurred the lines between investing and betting because of their coin-toss, speculative nature. Most folks lose money on them and they are still deemed too risky for retail investors in the European Union (EU). In Britain, they were once labelled gambling products.

Opening the door to more of these via Polymarket feels like an unnecessary step into the unknown. ESMA’s approval could be misinterpreted as a green light for the company and its industry, even if it covered only a narrow subset of what’s out there.

As for the argument about treating sports predictions as a derivatives market, good luck with winning that debate in Europe. Sports bets, which account for 80% of prediction markets’ onshore activity, don’t fit the financial-supervision mould. Their oversight is also better established in Europe than in the US.

As for the racier trades, from wagering on declarations of war or Christ’s second coming, no number of claims of “informational value” will be fully persuasive. This stuff can create incentives for corrupt, illegal or dangerous actions to rig the outcome, as a recent paper co-authored by Bocconi University’s Luis Enriques explains.

But France-style bans are not the last word. It’s hard to get the EU’s 27 members to agree on regulation. Malta has gone it alone on crypto rules to bring in the industry’s money. And in a world where every few years brings a new form of casino finance, it’s worth sketching out workable regulation besides prohibition. Jackson Gutenplan, a Bloomberg Intelligence analyst, says one endpoint for prediction markets could be strictly regulating trades around politics, climate or corporate events.

But that’s a long-term challenge that doesn’t address the central issue today: that Polymarket [activity] still looks more like gambling than investing. The problem is both the speculative element and that the deck is stacked against the consumer, a former senior regulatory official tells me.

Country bans create their own difficulties and loopholes, but it still looks like the riskier punt would be rushing to give this market a regulatory blessing. Supervisory dice rolls can wait. ©Bloomberg

The author is a Bloomberg Opinion columnist writing about the future of money and the future of Europe.