The UK’s Financial Conduct Authority has reportedly contacted prediction market companies as part of talks over whether to loosen a retail ban that has been in place since 2019.
FCA reviewing the 2019 restriction
According to a Friday report from The Times, the regulator is weighing whether to lift a ban that has kept UK-based retail investors from using prediction market platforms including Polymarket and Kalshi. Because these platforms offer binary options tied to event contracts — including sports, politics and weather outcomes — they fall within the scope of an FCA measure introduced in April 2019. Under that rule, firms were “prohibited from selling, marketing or distributing binary options to retail consumers.”
When the ban was announced, Christopher Woolard, then the FCA’s executive director of strategy and competition, said: “Binary options are gambling products dressed up as financial instruments.”
Report says UK retail users have been bypassing controls
The Times said many retail investors in the UK have been using virtual private networks, or VPNs, to get around the country’s restrictions on prediction markets and trade on Kalshi and Polymarket, both of which have operations in the US.
In April, Bernstein Research estimated that the prediction market industry could grow to about $240 billion in trading volume in 2026 and $1 trillion in 2030.
US legal fights remain a live issue for platforms
If the FCA reverses the 2019 ban, platforms such as Kalshi and Polymarket could still run into some of the same problems they face in the US. There, individual state gaming authorities have filed lawsuits over sporting event contracts offered by the companies.
Last week, New Jersey officials petitioned the Supreme Court to hear the state’s case against Kalshi. The matter could help clarify how authority over prediction markets is divided between state and federal regulators.