FCA weighs easing UK prediction market ban

Britain’s Financial Conduct Authority has reportedly discussed easing restrictions on retail financial prediction markets, but the regulator had announced no policy change as of September 7, 2026.

The FCA held discussions with trading platforms about potentially reopening financial prediction markets to retail investors, according to a Times report. Industry representatives reportedly argued that British consumers already access overseas platforms, including Kalshi and Polymarket.

The discussions have not produced a public consultation, proposed rule or implementation date. The regulator’s latest published position continues to classify prediction contracts linked to financial and certain climate events as binary options.

The FCA permanently prohibited firms from selling binary options to retail consumers in April 2019. It has maintained that these contracts resemble gambling, carry a high risk of losses and are difficult for consumers to value accurately.

UK prediction market rules divide regulatory control

Prediction markets allow users to trade contracts based on whether an event will occur. A contract may pay a fixed amount when an outcome happens and nothing when it does not. Financial examples can cover interest rates, stock indexes or economic data.

The FCA regulates products tied to financial and certain climate events. Sports, political and other non-financial contracts generally fall under the Gambling Commission’s authority. This division means a platform seeking to offer several contract categories could require approvals from both regulators.

The Gambling Commission said in February that many current prediction platforms would probably meet the legal definition of a betting intermediary. Its official guidance compares their core structure with a betting exchange.

The commission also warned unlicensed operators against targeting or transacting with consumers in Great Britain. Operating without an appropriate gambling licence can constitute a criminal offence.

Overseas demand is testing Britain’s restrictions

Industry participants reportedly told the FCA that millions of Britons are using overseas prediction platforms. Some users are said to circumvent geographic restrictions through virtual private networks, although the FCA has not published independent figures confirming the scale of that activity.

Such access can place consumers outside the protections applying to authorized British firms. Depending on the platform and product, customers may lack access to domestic complaint procedures, the Financial Ombudsman Service or Financial Services Compensation Scheme coverage.

Prediction markets have expanded quickly in the U.S., where Kalshi operates as a federally regulated designated contract market. Polymarket uses blockchain infrastructure and has built substantial trading activity around elections, economics and other events.

The sector has also faced political scrutiny. As crypto.news reported, U.S. lawmakers investigated suspicious prediction-market wagers connected with military events and possible access to non-public government information.

The FCA must formally consult before access changes

The FCA previously raised prediction products in its paper on expanding consumer access to investments. It asked whether restrictions should depend more closely on a product’s risks instead of its label.

Its March perimeter report said the agency would consider whether to conduct further work on access or clarify the regulatory boundary. That wording leaves the review open but does not represent approval for Kalshi, Polymarket or another platform to offer financial event contracts to British retail customers.

The FCA’s original binary-options ban applies to firms conducting regulated business in or from the U.K. The measure replaced temporary restrictions introduced by European regulators and made Britain’s prohibition permanent. The FCA said binary options generated inherent conflicts because providers often profited when their customers lost money.

Any new framework could therefore require more than removing the existing prohibition. The regulator would need to decide which events qualify as financial products, what retail safeguards apply and whether customers must pass knowledge or suitability assessments. It could also consider position limits, standardized risk warnings and restrictions on incentives.

Any reversal would probably require formal proposals addressing product governance, appropriateness assessments, marketing, disclosure and loss protections. The FCA has not provided a deadline for deciding whether to begin that process.

The debate also arrives as trading platforms expand their British operations. Crypto.news previously reported that Robinhood secured FCA crypto registration before launching crypto trading through Bitstamp UK. In related coverage, Coinbase received broader UK investment permissions while expanding its U.S. prediction-market partnership with Kalshi.

For now, the reported discussions indicate regulatory interest rather than a change in law. Financial prediction contracts remain unavailable to British retail customers through FCA-authorized providers unless the regulator changes its rules.

Source: cryptonews.net