UK LEGAL
Rather, they facilitate arrangements between users of the platform.
In the US, operators such as Polymarket and Kalshi are generally regulated by the Commodity Futures Trading Commission (CFTC), which regulates financial contracts that involve derivatives, futures and swaps. This is, in some respects, a pragmatic outcome. Gambling regulation in the US remains highly fragmented, with many states offering no licensing options and others only licences focussing on sports wagering, rather than broader event based markets. Regulation of prediction markets in Europe is more of a developing position, but generally they are viewed as a form of gambling. Some jurisdictions have moved to ban them, for example the French regulator ANJ has publicly stated that it regards prediction markets as illegal gambling products.
On 17 June 2026, nine European gambling regulatory authorities (Germany, Belgium, Spain, France, Italy, the Netherlands, Poland, Portugal and Switzerland) issued a joint statement, which included a view that prediction markets “carry serious risks of illegality, fund freezes, insider trading and financial volatility”. They announced close collaboration on this issue and confirmed that they would, where necessary, take action against prediction markets that do not comply with local regulations.
In the UK, the Gambling Commission published a blog post in February 2026 stating that it considered prediction market operators would appear to meet the definition of a “betting intermediary” under the Gambling Act, requiring a licence to provide services to customers in Great Britain. The fact that users bet against each other rather than against a bookmaker is not a problem under UK law, given that there is a specific licence type for such operations.
There may be some cases, however, where a prediction market would fall within the remit of the UK’s Financial Conduct Authority rather than the Gambling Commission. The boundary between the two regimes is not always clear, but the subject matter of the contract is a key factor, in particular outcomes that involve the value of share prices or currency exchange rates may fall outside the definition of gambling, instead requiring regulation by the FCA.
SHOULD REGULATION BE BASED ON CONSUMER HARM? An argument often put forward is that prediction markets involve the same risk of harm to consumers as gambling products, so should be regulated as such.
A difficulty with this approach is that there are distinct categories of users of prediction markets. Individual consumers may use prediction markets in much the same way as they would use a traditional betting platform, for example to speculate on the outcome of a
sporting match or political election. As with other betting products, some of these may be very sophisticated consumers betting with a large bankroll and deep knowledge and experience of the market in question, but ultimately these are individuals who may be at risk of developing addictive or otherwise unhealthy behaviours in relation to the product. Whilst this is also the case with traditional betting products to some extent, prediction markets are also widely used by corporate entities, for example to hedge against the impact of political events, climate change, currency rates or share prices. Regulations suitable for protecting individual consumers, such as mandated responsible gambling interactions, are not appropriate for such customers - a corporate entity cannot suffer from gambling harm.
The current position under UK law, whereby the subject matter of the contract affects its regulatory position, only goes some way to addressing this issue. Corporate entities may use prediction markets to hedge their exposure to commercial risks, purchasing contracts linked to factors that may affect the performance of their business or investments. For example, a solar farm might use contracts linked to hours of sunshine to manage revenue volatility. Regulation must also consider the risk of
prediction markets being used for insider trading. Markets commonly cover political events, such as whether talks will lead to a peace deal in an ongoing conflict, this risk appears to be significant. The current gambling regulatory regime in the UK has measures in place to preserve betting integrity in sporting events, but this does not address risks associated with other betting markets.
From a consumer protection perspective, it may be preferable to adapt the gambling regulatory framework where necessary for sophisticated corporate users and to address risks of insider trading, whilst ensuring appropriate protections remain in place for individual consumers.
CONCLUSION
The debate surrounding prediction markets is fundamentally a debate about the purpose of regulation itself. Prediction markets have features in common with both financial derivatives and traditional betting and have a user base including both individual consumers and corporate entities. Whether they should fall within gambling law, financial services regulation or a new bespoke regime, regulators will need to ensure prediction markets are subject to a regulatory framework that addresses the different risks and use cases in an appropriate and proportionate way.
Melanie is a gambling regulatory lawyer with 13 years’ experience in the sector. Melanie advises on all aspects of gambling law including licence applications, compliance, advertising, licence reviews and changes of control. She has acted for a wide range of gambling operators including major online and land-based bookmakers and casinos, B2B game and software suppliers and start-ups. She also frequently advises operators of raffles, prize competitions, free draws and social gaming products. Melanie has a particular interest in the use of new technology for gambling products and novel product ideas.
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