Gaming law disputes as to the qualification of financial bets, binary bets, spread betting and trading tournaments are more and more frequent as a consequence of the continuous growth of such product. However, the main issue is whether it can be qualified as a betting product that can offered under a gambling license or is a financial product subject to finance law restrictions.
The answer to the question above depends on the features of the specific product and therefore a single answer applicable to all the products above cannot be given. The European Commission held is 2012 that binary options are financial instruments subject to the obligations prescribed by the Market in Financial Instruments Directive (the so called MiFID) and this opinion was also upheld by the Italian banking supervisory authority, CONSOB.
However, the opinion of some gambling regulators is different and indeed the offering of binary options under a gaming license is very common on .COM platforms while, based on my knowledge, none of the European regulated gambling markets (i.e. Italy, Spain, France and Denmark) has authorised their offering so far.
This might be a cultural issue since the approach from authorities is to qualify any bet relating to event concerning financial products as a financial instrument. But for instance, under Italian law, new sportsbetting regulations approved last year do not prescribe any express restriction on the possibility to place bets on financial products. Therefore should the regulator approve this kind of “event“, no regulatory change would be required.
The advantage of the qualification as a gambling product would be that operators would be able to allow players to bet through their gaming account given that punters on such product are mainly gamblers. On the contrary in some jurisdictions (like Italy) funds deposited on gaming accounts cannot be withdrawn, but only funds previously wagered and won can be taken out of the account which which would limit the possibility to have two separate wallets depending on the type of product involved.
It will be interesting to see the developments on the matter.