PREDICTION MARKETS
unattractive by the culture in many EU countries whose populations view betting as something strictly for sport or horse racing. The financial path: Some newer platforms are trying to use MiCA to register as Crypto-Asset Service Providers (CASPs). This would allow them to passport their services across the whole EU under one license, thus avoiding the fragmentation of gambling license regimes. However, similar to the UK, the European Securities and Markets Authority (ESMA) has instituted a ban on binary options for retail investors unless a platform can prove they are not gambling dressed up as finance. Trades are also restricted to non-political markets (e.g. commodity prices or economic data) for the most part to avoid being classified as gambling. In Europe there are also tax disincentives to structuring gambling as an investment. As in UK, there is typically no tax levied on winnings, but gamblers may find their winnings from prediction markets qualify as trades and are subject to income tax. There is also no capital gains regime for gambling in most of Europe. Unlike the US, prediction market losses cannot easily be written off against other investment gains, making them less attractive to professional traders and more for punters. The future of prediction markets in the EU is not without regulatory and cultural hurdles but this has not prevented Kalshi from opening an EU division. Whilst it will likely look to expand aggressively, the bigger future may lie in institutional forecasting. This would allow institutions to gain exposure to events for which their own (increasingly AI-driven) data can forecast outcomes. Malta Despite being a full EU member, Malta deserves a special mention of its own. The MGA already has a framework for licensing betting exchanges and, in May, 2026, the country's economy minister declared his ambition to regulate prediction markets. Whether a Maltese license would enable prediction market operators to offer them more widely across Europe certainly has to be considered as a possibility. Developments discussed elsewhere in this edition indicate that the window may be closing on this opportunity but it remains ajar.
Non-EU Europe Outside of the UK and EU, Europe is a mixed picture. Some countries are leading the way in "financializing" these markets, while others treat them as strictly illegal gambling.
i. Switzerland: the pragmatic approach 16
While strictly controlling gambling, the Swiss are very open to financial innovation. Responsibility for financial regulation, market integrity, AML etc. resides at the federal level with FINMA, whereas sports betting is regulated by GESPA, an inter- cantonal regulator which issues licenses and looks at issues like problem gambling and player protection. The distinction is important because the Swiss Gambling Act expressly states that financial market activities will be regulated by FINMA, whether or not they are exempted from the scope of the Act. Platforms like Polymarket have been blocklisted by GESPA because they offer sports betting products without a Swiss gambling license. Prediction markets fall outside the current licensable categories. Sports betting can be licensed, however, it is mostly the preserve of public sports betting monopoly, Swisslos. An operator might argue that there is a high degree of skill involved such that it would qualify as a skill game but otherwise, prediction markets could not be licensed as a gambling product. Swiss residents can legally trade event contracts through regulated financial brokers. ForecastEx is one service in Switzerland that treats the trades as financial derivatives rather than bets keeping it in a safer legal category. It may be worth the trouble as gains are typically treated as capital gains (which are generally taxed at zero percent for private individuals in Switzerland).
ii. Norway: the state monopoly
Norway is one of the toughest markets in Europe for prediction platforms with the country’s Gaming Scheme Act of 2022 outlawing the provision, marketing, or payment facilitation of any form of gambling activity without authorization. 17 The country maintains a strict state monopoly on gambling, with Norsk Tipping having sole rights to provide online betting. Any
16 Gleaned from Dr. Simon Planzer’s comments at the IMGL-IAGR Masterclass, ICE Barcelona, January 2026 17 https://www.lexology.com/library/detail.aspx?g=a55c1803-1f49-4253-b863-11ea40ee25ef
IMGL MAGAZINE | JUNE 2026
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