Woofun AI reports that the European Securities and Markets Authority (ESMA) has determined that prediction market "Event Contracts" qualifying as financial instruments under MiFID II are classified as binary options. Consequently, these products are prohibited from being marketed, distributed, or sold to retail investors within the EU.

ESMA emphasized that product classification relies on actual function rather than commercial labeling. Platforms offering these contracts to professional investors must still hold MiFID II authorization if providing investment services in the EU.

Additionally, such contracts may face national gambling laws or fall under the Markets in Crypto-Assets Regulation (MiCA) if tokenized but not deemed financial instruments.