UK regulator considers easing ban on financial prediction markets

Britain’s top financial watchdog is quietly exploring whether to loosen its grip on prediction markets, a category of trading it effectively killed off for retail users back in 2019. The Financial Conduct Authority has been in discussions with trading platforms about potentially easing access to prediction markets, a move that would represent a meaningful reversal in the regulator’s stance toward instruments it once deemed too risky for everyday investors.

The reason for the rethink is straightforward: British users aren’t waiting for permission. They’re already trading on US-based platforms like Kalshi and Polymarket, routing around domestic restrictions with VPNs.

The numbers tell the story

Combined monthly transaction volumes on Kalshi and Polymarket surged from under $5 billion in September 2025 to roughly $24 billion by April 2026. That’s nearly a 5x increase in seven months, and a chunk of that activity is coming from users in jurisdictions where these platforms technically aren’t supposed to be accessible.

The FCA banned retail binary options in 2019, and many financial prediction market contracts fall squarely under that prohibition. Binary options are essentially yes-or-no bets on whether an asset will hit a certain price, and the FCA viewed them as instruments that consistently left retail traders worse off.

A jurisdictional tangle

The FCA draws a distinction between financial or climate-related contracts, which fall under its authority, and non-financial events like political outcomes or sports results. Those latter categories are the domain of the UK Gambling Commission.

The UKGC signaled its own position in February 2026, indicating that commercial prediction markets dealing in non-financial events may need a betting intermediary license, similar to what existing betting exchanges already hold.

Meanwhile, licensed platforms are already emerging to fill the gap. Versus, for instance, has launched a UK-facing offering that operates within the existing licensing framework. But the bigger US platforms remain blocked for British users through official channels, which creates a two-tier system where savvy traders access global markets while less technically inclined users are limited to whatever domestic alternatives exist.

Why prediction markets matter beyond trading

Kalshi holds a designation as a regulated exchange with the US Commodity Futures Trading Commission and has expanded into contracts covering economic data releases, Federal Reserve decisions, and other macro events. Polymarket operates on the Polygon blockchain, giving it a crypto-native infrastructure that makes transactions transparent and settlement automatic.

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