Britain's Financial Regulator Considers Reversing Prediction Market Restrictions: Sources
Britain's Financial Conduct Authority is reportedly considering reversing restrictions on prediction markets for everyday investors following pressure from the industry and evidence that users are circumventing current limitations.
Britain's Financial Conduct Authority (FCA) has reportedly initiated contact with companies operating prediction markets as it explores the possibility of relaxing restrictions on retail investors that have been in effect since 2019, according to sources.
A Friday report published by The Times indicates that the FCA is considering reversing its ban on prediction market operators such as Polymarket and Kalshi, which currently prevents UK-based everyday investors from accessing these platforms. Given that prediction markets provide binary options contracts on various events, including politics, sports and weather outcomes, they are subject to an April 2019 prohibition enacted by the FCA that "prohibited from selling, marketing or distributing binary options to retail consumers."
Binary options are gambling products dressed up as financial instruments
Christopher Woolard, FCA's executive director of strategy and competition
The Times report reveals that numerous retail investors located in the UK have been utilizing virtual private networks (VPNs) as a method to circumvent the nation's prediction market restrictions and conduct trades on platforms like Kalshi and Polymarket, which both maintain operations in the United States. Research from Bernstein published in April projected that the overall prediction market sector could expand to approximately $240 billion in trading volume during 2026 and reach $1 trillion by 2030.
In the event that the FCA decides to reverse the 2019 prohibition, prediction market operators such as Kalshi and Polymarket may encounter comparable regulatory challenges to those they currently face in the United States, where state-level gaming regulators are pursuing legal action against these companies regarding contracts on sporting events. Just last week, officials from New Jersey submitted a petition to the Supreme Court requesting a hearing for their case against Kalshi, which could potentially result in greater clarity regarding the jurisdictional boundaries between state and federal authorities concerning prediction markets.