A binary choice
Prediction markets are binary bets, says EU financial regulator
ESMA warns operators offering banned ‘predictions/binary’ products.
In +More: AUSTRAC clears Sportsbet but imposes restrictions on bet365.
Ohio: Lawmakers introduce bill to ban OSB.
A California court strikes down AG Rob Bonta’s cardroom restrictions.
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Binary code
Will you still want me when I’m nothing new? The EU’s financial markets regulator has stated that prediction markets may fall squarely within the existing product proscription against binary options.
The European Securities and Markets Authority (ESMA) reminded firms in a statement issued last Friday that they must “assess whether newly offered products fall within the scope of existing product intervention measures on binary options.”
ESMA said the statement was a response to the “growing popularity of prediction markets – or event contracts – and increasing retail participation globally.”
Say yes to heaven: ESMA’s definition left little room for semantics: an event contract is an agreement whose outcome is binary, “a fixed payout or no payout at all,” turning on “a yes-or-no answer to a question about a future event.”
“Not all event contracts are financial instruments,” ESMA noted; only those that qualify under the terms of MiFID II.
But where one does, the authority was unequivocal that it is a derivative, and that its marketing, distribution or sale to retail clients “is prohibited.”
Stop me if you think you’ve heard this one before: These prohibitions are not new. They descend from the temporary EU-wide ban introduced under ESMA’s 2018 Decision, later replaced by permanent national measures that mirror the original text and remain in force in every member state.
Binary options were, in other words, judged toxic enough to be pulled from the retail market long before Kalshi, Polymarket and their imitators reached Europe.
Rebranding the product does not resurrect it.
What’s in a name? The authority was pointed on labeling. A firm’s commercial name for a product – “event contracts” being the obvious example – is “irrelevant for the categorisation under MiFID II,” it said.
Operators are instead expected to run a “careful legal analysis of these products and their functioning,” while meeting an overarching obligation to “act honestly, fairly and professionally” in clients’ best interests.
The conclusion is that because binary-outcome contracts are “likely to be derivatives that are financial instruments,” they are likely to sit within the intervention measures.
The small print: The authority also preempted one of the sector’s favored design features: some contracts pay a “coupon” or “reward” representing interest on a customer’s deposited funds, but this, it stated flatly, “does not change the binary nature of the event contract itself.”
A footnote warned that “participating in circumvention activities to the product intervention measures is prohibited.”
Miffed: The obligations do not stop at retail. Because qualifying contracts are financial instruments, providing investment services around them in the EU requires authorization under MiFID II “irrespective of the category of clients.”
A platform distributing such contracts “even only to non-retail clients requires this authorisation.”
It is a threshold most prediction market operators do not currently clear.
A pincer movement: As Compliance+More reported last month, nine European gambling regulators used a joint declaration to warn that prediction markets increasingly resemble gambling products offered outside national licensing regimes.
ESMA now completes the pincer from the opposite flank, and a single footnote shows how little room is left.
An event contract, it observed, “may also classify as a bet under national gambling legislation” or, where tokenized and not a financial instrument, as a crypto-asset under MiCA.
Either/or: The standard operator defense, that a prediction market is a novel financial product rather than a bet, and belongs under financial rather than gambling law, is closed off from both sides.
If the contract is a financial instrument, it is very probably a banned binary option; if it is not, gambling law or MiCA is waiting instead.
+More predictions
New Jersey has requested more time to take its legal battle with Kalshi to the US Supreme Court. If granted, the extension would give the AG’s office until September 4 to seek review of a Third Circuit ruling favoring prediction markets. The state maintains sports event contracts are unlicensed sports betting, while operators argue they are federally regulated financial products. New Jersey is also considering prediction-market regulation and taxation.
The Michigan Gaming Control Board is withdrawing from the National Council on Problem Gambling (NCPG) following Kalshi’s admission under a new financial trading and services category. The board said Kalshi continues to offer unlicensed sports betting in Michigan and criticized its portrayal of sports event contracts as investments. It added that continued NCPG membership conflicted with its regulatory mission and responsible gaming commitments.
Earrings+More: Spotify has removed more than 10 million streams from Malcolm Todd’s song ‘Earrings’ after detecting artificial activity that distorted its US chart performance. The inflated figures had already determined an ~$3m Kalshi market on June’s most-streamed Spotify song, with payouts completed before confirmation. Kalshi is investigating, while Spotify plans additional chart checks to prevent similar manipulation in the future.
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+More
Australia’s communications regulator has formally warned mixed martial arts fighter Jamie Mullarkey for promoting an illegal offshore gambling site on Instagram in 2025. The ACMA said the case was its first enforcement action against an influencer for breaching online gambling rules. Mullarkey removed the content, ended the sponsorship and cooperated with investigators. Influencers can face penalties of A$59,400 ($41,200) for promotion and up to A$2.475m for facilitating access to illegal services.
Sportsbet in Australia: Meanwhile, the Australian financial intelligence agency AUSTRAC has cleared Sportsbet after the Flutter-owned operator completed remediation of serious anti-money laundering and counter-terrorism financing control deficiencies. A 2024 enforceable undertaking required an external audit and improvements to risk assessment, customer monitoring and suspicious-matter reporting. AUSTRAC chief Brendan Thomas said all required measures had been implemented and operationalized.
Meanwhile, AUSTRAC has placed bet365 under a legally binding enforceable undertaking after identifying serious weaknesses in its anti-money laundering controls, risk management and suspicious-transaction reporting. The bookmaker must overhaul its systems, introduce a robust ongoing risk-assessment framework and strengthen monitoring as threats evolve. The action followed an independent audit and subsequent AUSTRAC investigation.
Brazil: The Ministry of Justice is investigating CazéTV, Globo and SBT over potentially abusive betting advertising during World Cup broadcasts. The scrutiny follows data showing 35% of Brazilians have wagered since the tournament began, more than triple May’s level. Average deposits also increased, reaching R$272 ($53) per user on June 28, while more than 60% of deposits were made after 6pm.
Ohio ban effort
OH-no: Ohio lawmakers have introduced legislation that would dismantle the state’s online sports-betting market, replacing statewide mobile wagering with a restricted, casino-based model.
House Bill 971, known as the Save Ohio Sports Act, was introduced by representatives Johnathan Newman and Beth Lear.
The measure would require mobile sportsbook operations to be geofenced to licensed casinos, effectively ending the ability of customers to bet online from anywhere in the state.
Not seen, not heard: The bill would also prohibit all wagering on college sports, in-game betting, individual player proposition bets and parlays. Sportsbook advertising during games would be banned, while sports-betting kiosks operated through the Ohio Lottery would be eliminated.
Customers would be limited to wagers of no more than $100 and to placing a maximum of eight bets in any 24-hour period.
Supporters said the proposals are intended to curb predatory industry practices and reduce gambling-related harm.
Ohio already banned college-player proposition bets in February 2024, but HB 971 would go considerably further by removing all college-sports wagering and sharply limiting both the availability and range of permitted bets.
But, but, but: The proposal is likely to face strong opposition from sportsbook operators and lawmakers concerned about the loss of tax revenue.
Ohio has generated nearly $600m in sports-betting taxes since the regulated market launched in January 2023, with online wagering accounting for the overwhelming majority of taxable revenue.
Newman argued that relying on gambling proceeds to support education was not worth the social costs, saying the system benefits large gambling companies while exposing vulnerable residents to harm.
Click and collect: The bill has 10 cosponsors, although representatives Gary Click and Riordan McClain, who appeared alongside Newman when the initiative was announced in April, were not included.
Click’s office said he lacked the capacity to add the legislation to his workload but would continue monitoring it.
McClain’s office said he had not expected the bill to be introduced so early and could potentially add his name if it reaches the House floor.
The legislation would represent one of the most extensive attempts by any US state to roll back an established mobile sports-betting market.
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Card sharps
Strike! A California court has struck down regulations introduced by Attorney General Rob Bonta’s Bureau of Gambling Control that would have restricted blackjack-style and other player-dealer table games in the state’s cardrooms.
San Francisco Superior Court Judge Richard Darwin ruled that the Bureau exceeded its statutory authority.
The court found its role was to enforce California gaming law rather than create statewide restrictions that effectively rewrote it.
The measures, approved earlier in 2026, targeted games designed to comply with California’s prohibition on house-banked gambling outside tribal casinos. Cardrooms instead use rotating player-dealer positions, often supported by third-party proposition player services.
The regulations would have restricted blackjack-style mechanics and tightened dealer-rotation requirements.
This potentially forces operators to withdraw or redesign games that have been offered for decades.
An attack on business: The California Gaming Association (CGA), which challenged the rules, argued they could eliminate around half of industry revenue, prompting closures, reduced operations and thousands of job losses.
It also warned of consequences for municipalities that depend on cardroom taxes to support police, parks, libraries, youth programs and other public services.
The Department of Justice’s own economic analysis had projected a regulatory impact of at least $600m over 10 years.
Handing over a lifeline: CGA president Kyle Kirkland described the decision as confirmation that the AG could not bypass the legislature to reshape gaming policy. He said the ruling provided a “lifeline” to cardroom-dependent communities and accused regulators of advancing tribal gaming interests at the expense of established operators.
The dispute forms part of California’s long-running battle over the dividing line between lawful player-banked cardroom games and casino-style banked games reserved for tribal operators.
Tribal groups have maintained that some cardroom products improperly imitate blackjack and baccarat.
The ruling protects existing cardroom operations, although further litigation or an appeal by the state could continue the fight over regulatory authority and gaming exclusivity.
Calendar
Jul 8-11: NCLGS summer meeting, San Diego
Jul 22-24: NCPG Annual Conference, Nashville
Sep 21-24: NASPL, Orlando
Sep 29-Oct1: Regulation and compliance track, SBC Lisbon
Oct 15: Gaming in Spain, Madrid
Nov 10: Gaming in Germany, Berlin
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