Britain's Financial Conduct Authority has been in discussions with trading platforms about whether to ease its ban on retail access to financial prediction markets, according to reports. The talks come as British consumers are accessing platforms like Kalshi and Polymarket through virtual private networks, operating outside UK consumer protections.
In 2019, the FCA permanently banned firms from selling, marketing, or distributing binary options to retail customers. Prediction market contracts, which pay out based on yes-or-no outcomes, fall under this ban. The regulator determined that contracts referencing financial or certain climatic events fall under its purview, while sports and political outcomes are governed by the Gambling Commission.
A second regulatory hurdle exists: the UK Gambling Commission stated in February 2026 that commercial prediction markets meet the nation's legal definition of gambling and would require a betting intermediary license, the same authorization held by betting exchanges like Betfair Exchange and Matchbook. A platform offering a full range of markets would need both licenses.
The FCA's December 2025 discussion paper acknowledged the regulatory ambiguity, stating that prediction markets "depending on how it is structured, this type of investment may meet the definition of a binary option and be banned under our legal and regulatory framework."
A precedent exists for the FCA reversing retail bans of this kind. The authority banned the mass marketing of crypto exchange-traded notes in 2020 but lifted that ban in October 2025 for contracts traded on recognized investment exchanges. Crypto ETNs now sit in the restricted mass market category, where marketing to retail investors is permitted subject to risk warnings and other safeguards.
Gibraltar has already established a dedicated framework: its Prediction Market Regulations 2026 took effect on July 13, carving the sector out of the territory's Gambling Act and requiring event contract approval from its Gambling Authority. On mainland Britain, the FCA's most recent perimeter report still holds that the ban remains appropriate, with no details of any regulatory change yet surfaced.
