UK and EU prediction market regulation

Regulators in the United Kingdom and the European Union are examining the legal status and risks associated with prediction market platforms such as Polymarket and Kalshi.

In the UK, the Financial Conduct Authority is considering relaxing a 2019 ban on retail investors accessing prediction markets. This potential shift follows reports that consumers are using VPNs to bypass domestic restrictions and access international platforms. Transaction volumes on these platforms grew from under $5 billion in September 2025 to approximately $24 billion by April 2026. Any change in policy would require the FCA to overturn existing binary options prohibitions, and the UK Gambling Commission has noted that markets dealing in non-financial events may be classified as betting intermediaries.

Concurrently, the European Securities and Markets Authority (ESMA) has warned that Polymarket and Kalshi lack the necessary authorizations to serve users within the EU. ESMA noted that the legal classification of prediction contracts is inconsistent, potentially falling under MiFID II, MiCA, or national gambling laws. The authority also raised concerns regarding market integrity, stating that limited identity verification on blockchain-based platforms can make it difficult to detect “insider trading, wash trading, and coordinated manipulation.”