Polymarket is trying to convince EU and UK regulators that its event contracts should be treated as financial instruments rather than gambling products.

That classification could provide a basis for regulated operations, but contracts treated as financial instruments may also face restrictions on retail distribution.

The company has held discussions with the European Securities and Markets Authority, the European Commission, the UK Financial Conduct Authority and national regulators as part of its European licensing efforts, the Financial Times reported, citing people familiar with the matter.

According to the report, Polymarket argues that its contracts operate like derivatives and should therefore be regulated under financial-market rules.

The regulatory paths differ between the EU and UK, but both separate the classification of individual contracts from the question of who may trade them.

ESMA said in July that event contracts tied to an underlying covered by MiFID II may qualify as financial instruments. Platforms offering those contracts require MiFID authorisation, even when serving only professional clients.

Contracts with a fixed payout or nothing based on a yes-or-no outcome also fall within national restrictions on binary options, which prohibit their sale to retail investors.

As Finance Magnates previously reported, calling them “event contracts” does not change that treatment. Crypto-assets outside MiFID may instead fall under MiCA, while products treated as bets remain subject to national gambling laws.

The EU therefore has no single authorisation covering Polymarket’s entire contract range.

The FCA ’s perimeter report places contracts linked to financial or certain climatic events within its remit and identifies the products it has reviewed as binary options.

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