Spanish regulators and industry debate prediction-market rules
Regulation1 min read
Representatives of Spain’s DGOJ, the CNMV and industry participants debated how prediction markets should be classified at a Madrid event on 28 October. Spain’s approach considers whether a product involves an uncertain outcome, a financial contribution and a quantifiable prize; industry participants also argued that hedging, price formation and early position closure should be considered. Participants differed on whether national coordination or EU-wide rules would be preferable.
Representatives of Spain’s DGOJ and CNMV and industry professionals discussed whether prediction markets should be regulated as gambling or financial instruments at an event in Madrid. Blockchain for Europe, Asensi Abogados and XReg Consulting organised the roundtable at MERGE Madrid on 28 October.
In the Spanish approach, the subject of the event being predicted is reportedly the main criterion for classification. A product can be considered gambling and require licences if it involves an uncertain outcome, a financial contribution and a quantifiable prize. Neither the technology used nor the user’s motivation changes that assessment.
Industry participants argued that the assessment should consider contract features such as hedging, price formation and the ability to close positions before an event is resolved. The financial discussion concerned MiFID II and whether some contracts could be treated as binary options, which cannot be marketed to retail customers in the EU.
Participants examined Gibraltar’s prediction-market regime, which sits within its gambling rules and includes requirements for contracts, settlements, participant protection and customer funds. They agreed that the products should be regulated but differed on whether national authorities should coordinate or the EU should adopt harmonised rules to avoid fragmentation across 27 frameworks.