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The UK’s Financial Conduct Authority (FCA) has begun reaching out to trading platforms about whether to ease its long‑standing ban on prediction markets, according to The Times.
The move comes as more British consumers turn to American sites such as Kalshi and Polymarket, often using VPNs to bypass restrictions. The FCA originally blocked prediction markets in 2019, classifying them as binary options trades based simply on whether an event will happen or not.
Regulators argued at the time that retail investors risked heavy losses and might not fully understand the products. But industry voices now insist the prohibition is outdated. They point to millions of UK users already active on overseas platforms, warning that the ban is pushing business offshore and leaving traders exposed to unregulated operators.
Lobbying efforts have intensified, with multiple stakeholders presenting evidence to officials. One City source told The Times, “It’s like most prohibitions, they are largely ineffective. The concerning thing is that regulators who have an obligation to prevent consumer harm are by their actions effectively driving consumers to operators with no regulatory standards at all.”
Operators would need to obtain betting licenses
The FCA’s ban on binary options remains the first barrier for prediction markets in Britain. Unless that rule is lifted, platforms cannot legally offer trades tied to financial events.
When the ban was introduced in 2019, the FCA said it was responding to “widespread concerns about the inherent risks of these products and the poor conduct of the firms selling them.” In its latest paper, it repeated that “purely speculative products tend to cause net harm to consumers and do not typically support growth in the real economy.” But earlier this year, the regulator asked for industry views on speculative products as part of a wider consultation.
Even if the ban is removed, companies that want to run markets on political outcomes, such as election results, would still need to apply for gambling licences.
Meanwhile, prediction markets in the US have grown rapidly. Trading volumes reached $51 billion last year, with forecasts of $240 billion in 2026 and as much as $1 trillion by 2030.
Yet even there, regulators remain divided over who should oversee the activity, whether it falls under the Commodity Futures Trading Commission or state gaming laws. With the ninth circuit court recently ruling against prediction market operators, experts are already predicting that the case will make its way to the Supreme Court.
For UK operators, this means any future market would depend on clear rules from both financial and gambling authorities.
