Polymarket is reportedly lobbying European regulators to be classified as a financial services platform rather than a gambling website. According to the Financial Times, the company has engaged with the European Commission and European Securities and Markets Authority (ESMA) to advocate for regulation under MiFID rules. This classification would allow Polymarket to operate in the EU without facing strict gambling laws, potentially overturning bans in Spain and France.

In July, France ordered ISPs to block access to the platform, while Spain blocked both Polymarket and Kalshi in May while investigating their legality. Polymarket operates as a "prediction market" where users bet on real-world events, including elections and sports. The company has also reportedly met with Nikhil Rathi, CEO of the UK Financial Conduct Authority (FCA).

However, ESMA has expressed skepticism, recently warning that prediction markets are "rife with insider trading." Recent reports have highlighted concerns involving Google employees, political candidates, and White House staff allegedly trading on insider information. Furthermore, Polymarket has been accused of paying influencers to post fake betting videos, with The Wall Street Journal reporting that half of the "winning" bets in those videos would have lost in real life.