The UK Financial Conduct Authority is reportedly reconsidering its long standing ban on prediction markets for retail investors, opening the possibility that platforms such as Kalshi and Polymarket could eventually gain a clearer route into the British market.
The FCA has reportedly contacted prediction market companies as part of discussions over whether access to event contracts should be reconsidered. Since 2019, firms have been prohibited from selling, marketing or distributing binary options to UK retail consumers, a restriction that has effectively kept most prediction market products outside the regulated retail market.
No formal proposal or timetable has been announced, and the FCA has not indicated that the ban will definitely be lifted.
Key Takeaways
- The FCA is reportedly discussing whether to loosen restrictions on prediction markets for UK retail investors.
- Binary options have been banned from sale, marketing and distribution to retail consumers since 2019.
- Prediction markets can fall within that restriction when contracts are structured as binary event outcomes.
- Kalshi and Polymarket are among the platforms drawing attention as UK users seek access through offshore routes.
- Any policy change would likely require new consumer protection and regulatory safeguards.
FCA Reconsiders a Ban Introduced in 2019
The FCA imposed a permanent ban on binary options for retail consumers in April 2019. At the time, the regulator argued that the products were highly speculative and exposed consumers to significant harm.
Christopher Woolard, then the FCA’s executive director of strategy and competition, said:
“Binary options are gambling products dressed up as financial instruments.”
The restriction covers companies selling, distributing or marketing binary options to retail investors. Because many prediction market contracts are structured around simple yes or no outcomes tied to events such as elections, sports results, economic data or weather, some products can fall within the same regulatory category.
The FCA reiterated that position in a July perimeter report, saying the financial prediction market products it had reviewed were still considered binary options and therefore remained subject to the retail ban. However, the regulator also left room for further work on whether consumer access should be reconsidered or whether regulatory boundaries needed clarification.
UK Users Are Still Accessing Offshore Platforms
Despite the restrictions, demand for prediction markets has continued to grow. According to The Times, some UK retail users have been accessing platforms such as Kalshi and Polymarket through offshore routes, including the use of virtual private networks.
That creates a regulatory problem. If consumers are already seeking access to prediction markets through services outside the UK regulatory perimeter, the FCA may need to decide whether maintaining a complete prohibition provides better protection than allowing access through a regulated framework.
One government source quoted in the report argued that restrictions can have the unintended effect of pushing users toward platforms with fewer protections. That concern appears to be one reason the issue is now receiving renewed attention.
Prediction Markets Are Growing Rapidly
The discussions come as the global prediction market sector expands. Bernstein Research estimated earlier this year that prediction markets could generate about $240 billion in trading volume in 2026, potentially rising to $1 trillion by 2030.
Platforms such as Kalshi and Polymarket have helped move event contracts beyond niche use cases and into broader markets covering politics, finance, sports, entertainment and economic outcomes. A UK opening could therefore give regulated operators access to another major financial market. However, prediction products involving sports or political events could also create additional regulatory questions because gambling rules may apply alongside financial regulation.
A UK Framework Could Look Different From the US
Any decision by the FCA to permit prediction markets would not necessarily mean copying the US model. The regulator would likely need to address consumer protection, disclosure requirements, product suitability, marketing rules and limits on potentially high risk contracts.
Platforms could also face separate licensing requirements depending on the type of event being traded. That could create a more restrictive version of prediction markets than users currently see on offshore platforms. Still, formal approval would give operators a clearer regulatory route and allow them to serve customers without relying on uncertain offshore access.
US Legal Disputes Add Another Layer
The FCA’s discussions come as prediction market companies face major legal challenges in the United States. Kalshi has been involved in disputes with several state gaming regulators over whether certain event contracts, particularly those tied to sports, fall under federal derivatives regulation or state gambling law.
New Jersey has asked the US Supreme Court to consider that jurisdictional dispute. The outcome could have broader implications for how prediction markets are regulated in the US and may influence how other jurisdictions approach similar products.
Conclusion
The FCA’s reported talks with prediction market companies suggest the UK may be reconsidering whether its 2019 binary options ban remains the best way to regulate event contracts for retail investors. For now, the restriction remains in place, and there is no confirmed timetable for reform.
Any future framework would likely need to balance growing consumer demand with concerns around speculation, gambling-like behavior and investor protection. If the FCA eventually allows regulated access, the UK could become one of the most significant new markets for prediction platforms outside the United States.
