UK regulator considers easing ban on prediction market platforms
FCA explores lifting prediction market ban
The UK Financial Conduct Authority (FCA) has contacted companies that run prediction‑market platforms to discuss whether the regulator will ease a ban that has applied to retail investors since 2019.
The ban prevents firms from selling, marketing or distributing binary‑option contracts to private individuals. Binary options are contracts that pay out based on the outcome of an event, such as a sports result or a political election.
Key points
- The FCA is reviewing its 2019 prohibition on binary‑option prediction markets for UK retail investors.
- Platforms mentioned include Polymarket and Kalshi, both based in the United States.
- Retail traders have been using VPNs to access these services despite the ban.
- Bernstein Research predicts the global prediction‑market industry could reach $240 billion in 2026 and $1 trillion by 2030, though this is speculative.
- In the United States, state gaming authorities are challenging similar platforms, and New Jersey has petitioned the Supreme Court over Kalshi.
Regulatory background
In April 2019 the FCA issued a permanent ban on the sale of binary options to retail consumers, stating that “binary options are gambling products dressed up as financial instruments.” The ban applies to any firm that offers contracts that settle on the outcome of an event.
Industry context
The Times reported that the FCA has now opened discussions with prediction‑market operators. Bernstein Research, cited by the article, speculated about rapid growth in the sector, but those figures are not confirmed by regulators.
U.S. state regulators are pursuing legal action against similar platforms, and New Jersey officials have asked the Supreme Court to hear a case involving Kalshi.
Confirmed facts
- The FCA’s 2019 ban on binary‑option prediction markets for retail investors is in force.
- The FCA has reached out to companies such as Polymarket and Kalshi about a possible change.
- Retail investors in the UK have been using VPNs to bypass the ban.
- Christopher Woolard, the FCA’s executive director of strategy and competition, described binary options as gambling products.
Uncertainties
- The FCA has not announced a decision or timeline for any regulatory change.
- It is unclear whether the ban will be fully lifted, partially relaxed, or remain unchanged.
- Potential legal challenges similar to those in the United States have not been detailed.
Implications for investors
If the ban is lifted, UK retail investors could legally access prediction‑market platforms that offer binary contracts on events such as sports, politics or weather. The change could also bring the UK market in line with regulatory debates occurring in the United States.
Next steps
The FCA says it will continue discussions with market operators and will issue further guidance when a decision is reached.
