Classifying prediction markets: study by William O’Rorke (RDBF)

William O’Rorke, the partner in charge of ORWL Avocats’ Regulatory practice, has published a study on the legal classification of prediction markets in the September–October 2026 issue of the Revue de droit bancaire et financier (LexisNexis), a French banking and finance law journal. He argues that the line between gambling and financial instrument must be drawn market by market, not platform by platform, depending on whether the event can be reduced to an index or a measure.

Bet or financial instrument: the study’s argument

French gambling law has a very wide reach. Article L. 320-1 of the French Internal Security Code covers any stake placed in the hope of a gain that depends, even in part, on chance, whatever the player’s skill. Read literally, it would also catch options and futures. French law settled this conflict in 1885 in favour of futures markets, and the rule now sits in Article L. 211-35 of the French Monetary and Financial Code (CMF): financial classification prevails over gambling, but it is never presumed. It must be shown, contract by contract.

The study sorts markets into three groups. A sports bet has no link to MiFID II and falls under gambling law alone. A market on inflation published by INSEE, the French statistics office, or on the oil price rests on an underlying named in the law (CMF, Article D. 211-1 A, I, 7°) and is a binary option. In between, electoral and geopolitical markets fall within the residual category in point 8° of the same article.

For these markets, the author proposes a test: can the event be established without any margin of judgement, by a non-discretionary and reliable source? The official declaration of an election result passes the test. Deciding whether a ceasefire has been “achieved” requires judging a fact, not measuring it, and rules out financial classification.

“The classification of a prediction market cannot be decided at platform level.” (translated from French)

William O’Rorke, Revue de droit bancaire et financier, September–October 2026

What operators should take away

Financial classification does not remove the constraints. On 3 July 2026, ESMA (the European Securities and Markets Authority) recalled that such a contract falls under the ban on selling binary options to retail clients, and that distributing it, even to professional clients only, requires authorisation as an investment firm.

In the absence of any public position from the AMF (Autorité des marchés financiers, the French financial markets regulator), the burden of proof lies with the operator and gambling law applies by default. On 16 July 2026, the ANJ (Autorité nationale des jeux, the French gambling regulator) ordered the blocking of Polymarket, without distinguishing between types of market. A later development, not covered by the study: on 21 August 2026, Polymarket announced that it had challenged the blocking order before the French courts.

Each operator must therefore map its own markets. We set out the gambling, AMF and AML/CFT risks in our article Prediction markets: what are the regulatory consequences for operators?.

View the issue on the publisher’s website