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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:04.732)
Polymarket leads lobbying blitz to secure prediction markets acceptance as a financial service by UK and European authorities to supersede its current status as an illegal betting platform. As reported by the Financial Times, the Polymarket lobbying team has met with regulators in Brussels and London to change the outlook of prediction markets away from its current determination as online gambling. As stance, PolyMarket and company have
been rejected by 14 European gambling regulators. However, can the deep-pocketed venture convince higher-ranking authorities in Europe and the UK to change their faith in what constitutes the financial services to bring the expansion of event contracts into markets beyond USA? I'm Fernando Nott, Media Manager for SBC, and welcome to another episode of iGaming Daily, where we will discuss this and more with editor at large for SBC Ted Memir.
Ted, how are you today?
Ted Menmuir (01:04.107)
Very well Fernando, looking forward to talking on our prediction market, the VENT contract, something that is coming into play, isn't it?
Fernando Noodt (01:13.02)
Yeah, absolutely, absolutely. A prediction market, sorry, have been like the main topic, like top priority for for the gaming industry for quite some time already. So definitely looking forward to talk about this because I know our listeners are looking forward to hear about it as well. and they will hear all about it from editor at SBC News, Ted Arm Clay. Ted, how are you today?
Ted Menmuir (01:20.012)
Yeah.
Ted Orme-Claye (01:39.558)
I'm good, thank you, like Ted said, pretty interesting topic, one that's on a lot of people's minds, one that hopefully we'll learn a bit more about next week at the Prediction Forum in Lisbon, that I think we're planning on getting some good coverage of to plug that ahead, check out our live blog and everything. Yeah, looking forward to getting to the conversation.
Fernando Noodt (02:06.753)
And and before we get started, a big shout out to Optimove, the creator of positionless marketing and number one player engagement solution for iGaming and sports betting operators. big shout out to Optimove. So guys, let's get right to it. let's begin with who Polymarket is loving within the European and UK regulatory circles. Who wants to go first?
Ted Menmuir (02:35.373)
Okay, yeah, I'll take it from there. Yeah, you'll take it. Okay.
Fernando Noodt (02:41.881)
Okay, if you had Ted and going first, you have just one Cal She no, just kidding. go ahead.
Ted Menmuir (02:49.037)
So yeah, this is interesting news and it's certainly kind a...
development in European circles. And standing back, look, essentially, Polymarket is showing its hands in how it wishes to enter the UK and Europe and which regulatory bodies it wants to entice and engage with. In London, it is kind of circling, and I put that in kind of quote marks, the Financial Conduct Authority. And in Brussels, we're looking at the European Securities and Market Authority, ESMA. The end game here is to convince higher ranking
financial authorities to recognise prediction markets and their event contracts as a financial service over gambling, a status that's been placed on polymarkets and others by 14 European regulators to date. Polymarket begins what I like to call a kind of lobbying crusade and it will be interesting to see how it pitches.
you know, it's platform and event contracts as a service outside of the realm of betting.
As stands, think that European regulators view prediction markets as simply too entwined with sports betting. And it's also kind of plain to see in the service that they're offering in the US where you see kind of 80 % of wagering going towards sports related contracts. I view that polymarket has to really separate and make a clear distinction in why it should be treated as a financial service.
Ted Menmuir (04:27.279)
financial service which it hasn't to date even in the USA.
Ted Orme-Claye (04:32.659)
If I can just build on that a little, think what they're trying to achieve is a similar situation to an extent to what they've got in the US where the Commodity Futures Trading Commission is very much in their corner, isn't it? It's in the prediction markets corner. It views them as a financial asset, as derivatives and so on, and regulates them as such. But it's the state regulators who are the one, the state gambling regulators.
who accuse them of essentially being a gambling platform and an illegal one at that. But I think what they're trying to do is achieve that same status of European regulators that they enjoy with the CFTC. We know that they've been, from what we understand of what the Financial Times reported, they've been, as Ted said, engaging with the UK regulator. We can assume that's the Financial Conduct Authority. They've been engaging with the EU, I can't remember the name of it, ESMA.
the European Union, derivatives and so on, watchdog, and apparently some EU national ones as well. But like Ted says, I do think that I understand why they're trying to do it, because why not? But it's a very ambitious plan, because from what we've seen in Europe right now, governments in general are...
are keen on regulating the gambling sector, increasing regulatory controls on gambling, they're probably not going to be too keen to open the door to something that is, like Ted said, viewed by a lot of people as basically sports betting anyway, or at the very least is something that's kind of gambling adjacent, know, it's a gambling-esque form of financial services or a financial services-esque form of gambling. But yeah, like say, I do understand why they're trying to do it.
because if they pull it off, it unlocks a lot of new markets for them and clears a lot of regulatory barriers, but we can't overstate how much of a tough task it will be.
Ted Menmuir (06:26.701)
you
Fernando Noodt (06:35.29)
And even though European regulations are very different from those in the US, it seems like polymarket is copying its playbook from from the US to to secure regulatory acceptance in Europe as well. So how how likely do you see this strategy to to convince London and Brussels? how likely do you see them accepting polymarket's arguments?
Ted Menmuir (07:01.485)
Yeah, look, I do believe that to an extent it is called being kind of the US playbook and I think you are correct to kind of bring that in. But I think you have to also remember that there is kind of conflict out in the US as Ted was saying. Let's remember that even in, you know...
Even the commissions and regulatory, know, polymarket faces regulatory conflicts in the states of New York, New Jersey, Nevada, and others. You know, there is definitely a rift in the US. Now, turning to Europe at this stage, I don't necessarily think...
that Polymarket and others are looking for a decisive verdict on the status of prediction markets and what event contracts are. To me it's clear that they just need one European regulatory authority or regulator to specify that it believes that there is a level of distinction or ambiguity in what prediction markets offer and what end that event contracts could potentially be looked at as a financial system.
services product.
Reviewing what's happened in the past year, just end kind of the legal play out of Polymarket and other prediction markets is that I believe that that level of doubt and ambiguity is good for prediction markets and will give them kind of a platform or a pathway of entry or a foundation for which to expand their prediction markets into their prediction platforms into new markets. And that is essentially what they're looking for. Just that little kind
Ted Menmuir (08:40.687)
doorway to open.
Ted Orme-Claye (08:42.867)
Yeah, I was gonna say it's a way of getting the foot through the door, isn't it? I think from what we've seen from the documents you and I were looking at the other day, Ted, from ESMA, there was a statement they put out back in June, taking a look at prediction markets. They they appear to be open to the idea that there can be distinctions drawn between the different types of event contracts. But I think the ones they're more, I think the ones that are going to be more likely to be favorable towards, ones are more likely to approve, will be the ones that are.
Ted Menmuir (08:46.581)
Yeah.
Ted Orme-Claye (09:11.823)
have a stronger connection to financial services. So perhaps event contracts on the price of Bitcoin, know, things like that, event contracts on how well the FTSE 100 will do this month, how well the Dow Jones is gonna do this month, that kind of thing. But the ones that are connected to sports, the sports events contracts, which yeah, they're going to be seen as essentially a form of sports betting.
Ted Menmuir (09:25.069)
Mm-hmm.
Ted Menmuir (09:34.667)
Thank you.
Ted Orme-Claye (09:40.308)
which is the perspective of a lot of people. And like Ted pointed out earlier, from what we can see in the US, the vast majority of prediction market trading volume does go around those markets, around those event contracts. So yeah, so I think Ted's got it right there, and I think that's conclusion both he and I came to the other day when we were looking at covering this news. I think their best...
Their best case scenario from this will be getting some approval for those more financial market related event contracts and using that to gain a foothold as a regulated approved product in Europe and then just see if they can expand from there depending how attitudes change over the years. But it's not going to be on the same level that they're enjoying in the US.
Ted Menmuir (10:19.33)
Yeah.
Fernando Noodt (10:31.474)
Yeah, we'll hashtag wait and see if they decide to make that distinction to have European regulators look at prediction markets as something entirely different from gambling. But what is at stake actually for poly market and why do you think it's lobbing so hard right now?
Ted Orme-Claye (10:34.07)
Ha
Ted Orme-Claye (10:51.219)
They've, so I guess, if we look at what the situation they've been facing in Europe over the past year or two, they've been kicked out of, in fact, going back more than a year or two, I guess. They've been kicked out of quite a few countries by the gambling regulator, just real off a few. The more recent one was Italy. France have been opposed to polymarketing predictions for a long time. Belgium.
Ukraine, Romania, Portugal, I think, just to name a few of them. They've been kicked out by the gambling regulators. I think they're taking a look at this and they don't want to be regulated by gambling regulator anyway. Because as we've established, they don't view themselves as a gambling product. They view themselves as financial services. That's the crux of their argument in the US in this whole legal dispute involving them, the CFT, and these various state regulators.
Ted Menmuir (11:35.04)
Yeah.
Ted Orme-Claye (11:47.26)
if they were to be regulated by gambling authority over in Europe, that would completely undermine that argument. So they don't want anything to do with that. So I think they're lobbying because they've said, right, well, the people who are banning us are gambling regulators, so we need to take our case to the financial regulators and get approved by them in some form. So that's the reason there. And then on top of that, Polymarket are...
Then both they and Cauchy, who's obviously their kind of arch rival in this space, are both looking at boosting the valuations. think Polymarket are chasing a valuation of $22 billion, I think. Maybe it's gone up since the last check, but it's quite a lot. And unlocking access to new markets, especially very wealthy and sort of financially stable ones, I guess, like they might find in Europe, will be a good way of underpinning that.
Ted Menmuir (12:27.764)
Yeah, yeah.
Ted Orme-Claye (12:44.775)
that evaluation. So I think that those are the two reasons, I think, two big ones.
Ted Menmuir (12:52.737)
Yeah, I completely agree. It's all a question of them proving their validity and them proving that they've actually got a foundation of grounds to move beyond the US and take prediction markets and put it on a global scale. To date, it's been a very much a...
down to the US market alone, growth of these platforms, but for long-term valuation they're going to have to prove themselves on a global scale and that's yet to be seen.
Fernando Noodt (13:27.898)
That's yet to be seen, so in other words, hashtag wait and see. but right now, hashtag at break. we are gonna do a brief stop right here, but we will be right back because there there's you there is a lot to discuss about prediction markets in Europe.
Fernando Noodt (13:45.808)
Mm outbreak and
Ted Menmuir (13:48.129)
No, that's cool.
Fernando Noodt (13:57.605)
And we're back with more iGaming Daily to continue discussing the potential entry or maybe the the the consolidation of prediction markets in Europe as polymarket tries to lobby its way into regulation or into being perceived as something else apart from gambling. But of course we talked about polymarket and theirs and their strategy in Europe, but let's talk about Europe itself. Do you guys feel like there are any anxieties in Europe?
regarding the entry of of prediction markets.
Ted Orme-Claye (14:30.547)
100 yeah, I mean I think we've already seen a lot of those anxieties and kind of what I referenced before the ad break, know the various gambling regulators who are very much opposed to prediction markets. I think this kind of does fit in though with wider political and public anxieties about gambling and gambling related harm and societal impact of gambling that we're seeing across Europe, you know
Ted Menmuir (14:50.144)
Yeah.
Ted Orme-Claye (14:58.415)
In the UK right now, we're seeing these conversations around local licensing, around taxation, some more proposals to ban advertising. A couple of weeks ago, proposed by some members of the House of Lords. In the Netherlands, they're pushing for a total ban on advertising. Our colleague Victor just broke a story this morning, well yesterday actually, and followed up with it this morning.
Ted Menmuir (15:16.525)
Thanks.
Ted Orme-Claye (15:24.071)
about some developments in Bulgaria and the government are tightening regulations there. So there's general anxieties about gambling related harm in Europe anyway. And I think those are just naturally extend to anxieties around prediction markets, which as we've established in this podcast, are widely seen by a lot of people either as just as a straight up form of gambling anyway, or at the very least are, is gambling adjacent is very close to it.
So yeah, simple answer to the answer, yes, there are a lot, I think.
Ted Menmuir (15:54.614)
Yeah.
Ted Menmuir (15:58.958)
Look, I just want to add, it's been reported that Polymarket and others are spending a lot of money lobbying hard, but I think at a European level there's not even a guarantee that a European regulator, especially for financial services, will review the platforms of prediction markets or event contracts, especially if they don't see an avenue for forming a distinction.
think, you know, going back to my notes, think the primary kind of hurdle here is how do you separate out the event contracts that are so kind of fixed, especially as seen in the US, with sports betting or sports outcomes? And then it just reflects back to how do you say, I mean, how do you justify financial services?
product that is going to be kind of intertwined on the outcome of a sports event. mean, whose purpose does that serve? And how can you not call it gambling? And then the other thing here is that, for the, you know, there are so many regulations, not necessarily covering sports betting, but covering betting exchanges in Europe that have been standard for the past 20 years. This is not a product of...
you know, this is not a new product for European regulators.
Ted Orme-Claye (17:21.819)
If I can just add another thing as well that we haven't touched on yet. Sorry for the other anxiety we do have as well is one that we've seen in the US and seen in conversations around predictions in Latin America as well, is the, I think we know, is that the other concern is the whole conversation around insider trading, isn't it? And the potential.
Fernando Noodt (17:22.351)
And with yeah, go ahead.
Ted Menmuir (17:23.264)
you
Ted Orme-Claye (17:44.5)
integrity risks relating to financial services and financial markets and so on. think in that ESMA report that we've talked about already, at one point it was, I think it was the ESMA report, predictions were described as being rife with insider trading. know, financial services is a very important industry to a lot of European economies. I mean, you in the UK it's been arguably the backbone of our economy for the past couple of decades.
Ted Menmuir (17:44.575)
Yeah. yeah.
Ted Orme-Claye (18:14.355)
So there will be some anxieties around that across a lot of different European nations about the integrity risks that could arise from prediction markets and the importance of if you're going to allow the mean in some form you need to make sure that is being very closely monitored and regulated and it might even just obviously influence some countries to just say no we don't want them at all and the societal concerns element that we've already discussed.
Fernando Noodt (18:44.463)
Yeah, and and at one point prediction markets seemed to be something that was only for the US markets, like it was only like news there. but it has expanded worldwide now. So what about the audience in Europe? Do you do you think do you see them actually taking up event contracts or are they are prediction markets going to remain mostly focused on the on the US the US, sorry.
Ted Menmuir (19:11.853)
From my view, I mean, this is what proves the kind of distinction is if you did open this up to a new audience, a European one, one that's very nurtured very differently to that of American gamblers or American bethers, would they take it up? And that would kind of prove the distinction of prediction markets and the extra utility of event contracts, I feel. However, I think here is where you
get to that fundamental question of what is, you know, what are prediction markets trying to change in the fundamental engagement with wagering markets, right, all the other way around. And I think here to me, I kind of return to this, don't, there's part of me that thinks that maybe prediction markets is the tinder of
wagering or something different. So it is the same. It's wagering but just a different package. That is ultimately what we have to find out. And we're not going to be able to see that as consumers as it goes through this kind of judgment.
Fernando Noodt (20:33.179)
We we haven't tapped into other potential avenues for for for prediction markets under expansion, particularly in Gibraltar and Malta. So I'm gonna group that into where do you see this debate going in terms of regulatory determination and what about the the potential in in prediction markets expansion across Europe.
Ted Orme-Claye (20:56.243)
Well, there's definitely, you know, we're seeing the Gibraltar has become the first jurisdiction globally to launch a regulatory regime solely for prediction markets, which was a pretty big milestone for the sector, we have to admit. They've obviously, already, they like the first company they licensed was ADI Predict Street, who became quite well known through their partnership with the World Cup earlier this year. They've also licensed Wager Wires.
for a into prediction markets or I think they have in principle. I'm not sure if it's fully approved it actually. But yeah, there's those two there. Gibraltar is obviously quite a significant jurisdiction in Europe, particularly with relevance to the UK. I think, if you look at the betting side of things, probably about two thirds roughly maybe of Gibraltar businesses would count the UK as their primary market release, one of their top.
core ones. But yeah, the prospect of Malta setting up its own regulatory framework solely for predictions would be an even bigger one. I guess, particularly because Malta is a member of the European Union and it's already got that status as an international hub for companies to get a license and operate throughout the EU, despite, know, we've seen, as we talked about in previous podcasts, that has caused one or two conflicts recently in some jurisdictions.
But yeah, these jurisdictions setting up regulatory frameworks for it could be an inroad for the prediction markets companies to get involved in Europe on a wider scale. But it's not going to be the end of the discussion, the end of any regulatory pushback. Like I've said, we have seen...
regulatory pushback against some multi-based, multi-licensed gaming firms that are active in other EU nations, it's inevitable that you would get the same of prediction markets, especially when they're an even more controversial and newer vertical. But that is a very significant development to keep an eye on 100%.
Fernando Noodt (23:15.397)
Ted, you wanna add anything?
Ted Menmuir (23:18.387)
No, I've yet to kind of picture where I see this determination heading to. I think it's going to get stuck in the higher courts. I think that these ventures have such deep pockets that they, you know...
lobbying's in their instincts, I think they'll just take it from court to court and they will fight kind of any challenge at a regulatory level. think that, you know, my belief here is that that kind of ambiguity is now kind of plays in favor to Polymarket and others and their long-term strategy. It's where they wanted to be and I think we're to be here for a number of years trying to figure out what prediction markets are to European audiences.
Fernando Noodt (24:06.157)
And we're gonna be here for a couple of months and probably a lot of time talking about it.
Ted Orme-Claye (24:12.167)
Yeah
Fernando Noodt (24:12.233)
On iGaming Daily, so make sure you follow us on social media and are subscribe to the podcast on your preferred podcasting platform. And also subscribe to all SBC media newsletters where you will find the this and more information about the global betting and iGaming markets. So yeah, make sure you follow us everywhere because you will find out about everything. right now we're gonna hashtag wait and see what go what happens with prediction markets.
And we're gonna hashtag leave because this is the end of this episode. so Ted, Ted, thank you very much. thank you very much Naya McDonald for producing this episode. I'm Fernando Nott and to our listeners out there we'll see you in the next one. Goodbye.