The European Securities and Markets Authority (ESMA) has announced that certain prediction-market contracts may fall under the European Union's ban on binary options, effectively blocking their sale to retail investors. ESMA clarified that contracts with binary payouts, which depend on the outcome of future events, cannot be marketed, distributed, or sold to retail clients if they qualify as financial instruments. This move aims to regulate event contracts that are considered derivatives under MiFID II, bringing them under national product intervention measures. The warning from ESMA comes amid a surge in prediction markets across both cryptocurrency and traditional finance sectors. Companies like Kalshi and Polymarket have been highlighted as potential merger and acquisition targets, as the lines between exchanges, brokerages, and sportsbooks continue to blur.