The UK Financial Conduct Authority (FCA) is considering whether to ease restrictions on prediction markets for retail users, according to The Times. The regulator has reportedly begun discussions with trading platforms as Kalshi, Polymarket and other overseas services gain popularity among UK consumers.
Technically, the ban introduced in 2019 applies to the sale of binary options to retail customers. The FCA treats the financial prediction market products it has examined as binary options, meaning they remain prohibited for UK retail consumers.
Why the FCA is reviewing its approach
The FCA introduced the binary options ban because of concerns over significant consumer losses and poor conduct by firms selling the products. The permanent rules took effect on April 2, 2019.
Market participants now argue that the restrictions are becoming ineffective. UK consumers are increasingly turning to overseas prediction markets, with some reportedly using VPNs to bypass domestic restrictions. Industry representatives warn that this could push demand towards platforms outside the UK regulatory framework.
The FCA’s latest perimeter report confirms that prediction markets are under regulatory review. Its current position is that the financial prediction market products it has seen are binary options and therefore remain subject to the permanent retail ban. However, the regulator says it may conduct further work on consumer access to these products and on clarifying the regulatory perimeter.
Political markets would still require gambling licences
Lifting the financial restriction would not automatically open the entire UK market to prediction platforms.
Under the current regulatory framework, contracts linked to non-financial events, including sports and political outcomes, fall within the remit of the UK Gambling Commission. Companies seeking to offer markets on election results or other political events would therefore still need the appropriate gambling licences.
Any broader UK market would therefore require a clear distinction between financial event contracts and products that are effectively regulated as gambling.
US growth adds pressure
The FCA review comes as prediction markets continue to expand rapidly in the US. Market estimates cited in recent reports put trading volume at $51 billion in 2025, with forecasts of around $240 billion in 2026 and potential growth to $1 trillion by 2030.
The US regulatory framework remains contested as well. A key question is whether prediction contracts should fall under federal derivatives regulation or state gambling laws.
For the UK, the next major issue will be whether the FCA changes its position on financial prediction markets and what additional regulatory requirements platforms would face.
Source: iGaming Today / The Times
