13 06 2026- PARTHENOPE-MARCO TULLIO GIORDANO

On the flows guys, thank you so much, Marco.

Hello everybody. Thanks to be here. Also this new come for this new uh season Napolitan rebranded in control shift. Uh it's a pleasure for me to be here again because I have been one of the speaker of every uh season of this event from the beginning and also because uh even if uh I I live in Milan since 40 years in the in my heart I'm still a Napolitan. So it's always a uh an happy moment for me to to come back here.

Uh In the last years we starting we we change a little bit the the focus we will speak about web three and crypto asset because I work on this since a lot of year. Uh last year uh I spoke about uh um a topic called uh do the law makers ever catch the crypto guys in which uh I was provoking the system uh stating that it's very difficult in a distributed and then the decentralized environment to uh enforce the regulation uh against the the the the players of an ecosystem uh due to the distribution the the the decentralization but also the pseudonomity uh of the the decentralized application and users. Uh this year I would like to go deeper a little bit deeper on a vertical uh because in the last 12 years Uh, the there was a the there uh I've been has been a phenomenon prediction market collecting the attention of of the users but also of the media and bringing a a new market something like 30 billions of of dollars in one year around betting forecasting gambling and this kind of product. At the point that it become also a priority for some government for example in the in the US jurisdiction the White House is working with the local agency and there is a struggling in a battle with state entities against the the the central entity the the federation. Uh, first of all but sorry but Let me see if it works.

That's not Okay, now it's working. First of all just few bit about me. I'm unfortunately I'm a lawyer it's a little bit sad to start at this conference with two lawyers. Uh, but

[laughter]

Uh, I hope you will pay attention. I am a partner of Giuseppe who spoke before me we founded before a legal tech company LT42 and then a law firm a new technology law firm. Uh, but I came from criminal laws. on the asset. I have been as I told you speaker also in the first edition of the event of the Ethereum community in Italy and sometimes I annoy also law enforcement agency and students at the economic school of the Guardia di Finanza at the University of Milan.

Coming to the topic if I Okay. I think I have not to tell you what is a prediction market because Instagram, TikTok, the media, also the newspaper are full of information. But the interesting thing is to understand very well what is because sometimes a lot of people, a lot of buzz about this this phenomenon, but it's important to understand that is something something brand new comparing with the previous platform where you can buy derivatives or trade events. What is a prediction market? Substantially at its core prediction market a prediction market is a platform where user can buy or sell event contract and this contract whose the payoff depends on the outcome of a future event.

So you can decide if for example the price of an asset like Bitcoin will be more than an amount in a certain time frame or you can try to forecast if Spain will win this year the FIFA World Cup. The interesting thing is that all the management of these betting or trading of information and contract is based on smart contract. So, the interesting thing more moreover specifically for me and other lawyer is the fact on an event staked in a smart contract. There is an oracle so gather gateway providing information on the events in the real world and there is automatic payment or settlement or payout through this smart contract. So, the contract works substantially as a escrow and and also other smart contract run the the book on chain.

At the end at the resolution the oracle pushes the information and the contract payout automatically. What happen what what happen when we we we stake an amount and do a a bet? You you you pay a little percentage as the probability that the event will go in that direction. For example, if we think about does Donald Trump win the midterm election in the next autumn. There is the possibility to say yes or not and you pay small cents of dollar on the basis of the percentage.

So if for example the yes is 64 cents is because the ecosystem, the users, the participant to this bet think at the 64% that Donald Trump will win the midterm election. At the end user winning user will receive $1 and lose losers will lose everything. Mhm, sorry. I got Now for for lawyers the tricky question is how to classify this kind of phenomenon of services because we can think about them as a financial product in the specific specifically derivatives. So binary option it could be yes or not.

Or we can think about them as betting. Specifically in the case of non-financial events. For example sport events, weather, election and any other kind of events. These two classification bring two different consequence on the on the legal basis because for example financial derivative are governed by financial framework in Europe for example MiFID II directive and gambling are ruled by local statute jurisdiction. There is a a third way because this kind of event could be classified as sui generis contract.

So a third class brand new bringing new new ideas and we will see where where we will land in a few years. Even because it's very difficult to classify as derivative or financial product a request like this, no? Who will win the next FIFA FIFA World Cup? It's quite comprehensive that it will be considered as a gambling or or a betting. Despite this the two main jurisdictions, so the US jurisdiction and the European Union are facing this phenomenon in a different ways.

On one hand, US did a U-turn in the last two years starting from a very closed and restrictive position in which for example Polymarket was banned in 2024. And Kalshi, the second more centralized prediction market in US, faced a trial and lost in the first grade the the the trial against the the government and PredictIt, so the third prediction market, uh they they gained a a sort of exemption for academic research and academic purposes. So, they have the license to in order to allow user to bet on the result of the the the political votes in US, but also PredictIt was attacked and pushed to to to interrupt the the the services. Starting from the Trump administration, so after 2025, the the the the government the US government did a U-turn and started to dismiss the the the trial and and and the action against this the platform and issued a regulation under the financial authority, so CFTC. as a derivative markets.

Meanwhile, the single state some single US state tried to enforce the regulation the previous regulation against against the the provider. So, we can see that in New Jersey, Nevada, in Massachusetts, in Arizona, all the state the local jurisdiction tried to to to to ban this kind of service or tried to sanction the providers for unlawful betting. Moreover, in the last weeks, also the US Senate banned prohibited to the senators and to their staff to to to play and to use a prediction market. Why? Substantially for the risk of insider trading.

Probably you you heard about the fact that there is a lot of space for insider trading of this kind of market. We had some US soldier betting on some US operation because they knew the the information the relevant information. But also most recently we had Google employees catch to to to bet on some information related to the numbers to the report of the search engine because he had the information from the inside of the company and used this information to to perform insider trading. I I thought wow, why because why someone 3% of at least $200,000 spend their money on the possibility of the return of Jesus Christ. This is the example why it is very important to regulate this kind of environment because that 3% is not important the 3% because probably they are some fools.

The the important thing is the other 97% why they are putting staking some amount paying 97.1 cents in order maybe we offer to receive one one dollars. Why to gain just 3 cents for every dollars you stake your money there? The purpose is money laundering. Because you can have a justification from the source the origin of your funds.

If you have funds gained in other activities, you can put inside the pool of Polymarket and then when the tax police or the the agency ask the origin of the fund, you can say I won a bet on Polymarket. This is also the reason why European Union are still considering the framework to apply to this kind of phenomenon. As I told you, we can we we could try to classify them as derivative products or financial products, but the way is closed in this sense in Europe. Why? Because the the central authority ESMA European stock market agency securities, sorry, security market agency banned uh form with the red button and the green button you can uh choose to bet on one one result and European Union thinks that it is too risky for retail investor.

So, if a prediction market platform want to uh arrive in Europe should obtain a financial license and they could only offer this kind of services to professional investors and not retail, so not the common the common user. Then uh can think about the the crypto asset regulation. Why? Because most of this platform use stablecoins and smart contract to provide the service. And so, if you receive stablecoin from the user, you are for sure a CASP, a crypto asset service provider, and you have to provide, for example, AML.

So, identification, know your customer of the user. And you have to transmit, uh pursuant to transfer fund regulation, the information to to the authority. Uh the third pillar, the third option, the third possibility is to to consider to classify this kind of services as gambling services or betting services. And thing things uh uh became even worst because in Europe we don't have, like in US, a union law about gambling, but you have to obtain a gambling license in each state of Europe uh as gambling provider already already do. So, it's very quite difficult to to uh classify this this phenomenon in Europe.

Uh now standing this uh user want to use this kind of platform for example uh during the FIFA World uh In Italy and Europe, there there has been a lot of enforcement. For example, we we can see that uh Portugal shut down uh Polymarket. Netherlands sanctioned them for 420,000 uh euros for week unless they will geoblock the the Dutch users, but also uh uh uh Italy for example, but also Hungary, Romania Romania and Ukraine site blocking the the the services through a ISP ISP level, so with a blacklist. Uh Maybe we can just add that also for the user, not only for the provider is a problem because a user betting on a betting unlicensed betting platform could be sanctioned criminally because pursuant to article 4 of a very old law since '89 playing or using unlicensed betting platform is a crime also for for the user. Polymarket tried to survive uh setting some geographic restriction, for example, in Italy.

Uh At the beginning they tried to obscure the the website. Uh and then they they opened the website only for informative purposes because you can go on Polymarket, for example, checking the odds that Spain will win the the FIFA World Cup, but you cannot put your bet. Uh I leave you just with a open question. Uh it's simple as I told last year for lawmakers to address uh front-end developers, companies providing this kind of service is a little bit more tricky to try to enforce the regulation against the technology because if a smart contract allow an activity and that smart contract is deployed on the on the blockchain, it's impossible to stop it. So, probably we will going through a future where in the decentralized finance, in DeFi, user can use this kind of services, but UX companies, so companies providing the link, the connection, the the gateway to this kind of smart contract, should face the the regulation state by state.