UK FCA Weighs Lifting 2019 Retail Ban on Prediction Market Platforms

The UK's Financial Conduct Authority is considering easing its ban on prediction market platforms for retail investors, a restriction that has been in place since 2019.

Cointelegraph reported on September 7, citing The Times, that the FCA has been in contact with operators including Polymarket and Kalshi to discuss whether to lift the ban.

Prediction markets offer binary options that allow users to bet on the outcome of events such as sports, politics and weather. The FCA banned the sale, marketing and distribution of binary options to retail investors in April 2019, calling them "gambling products dressed up as financial instruments." Christopher Woolard, then the FCA's executive director of strategy and competition, used the same description at the time.

Many retail investors in the UK are bypassing the rules through virtual private networks, or VPNs, and continue trading on US-based Kalshi and Polymarket, The Times reported. Bernstein said in an April report that total prediction market trading volume could reach about $240 billion in 2026 and roughly $1 trillion in 2030.

If the FCA lifts the ban, prediction market platforms could face legal challenges similar to those in the US. In the US, state gambling regulators have sued Kalshi and Polymarket over sports event contracts. New Jersey recently appealed its case against Kalshi to the US Supreme Court, with a jurisdictional dispute between state and federal authorities awaiting a final ruling.