FCA Weighs Reopening UK Prediction Markets as Kalshi and Polymarket Draw British Users Overseas

Britain’s Financial Conduct Authority has held discussions with trading platforms about potentially easing its restrictions on retail financial prediction markets, according to a report by The Times, though the regulator has announced no policy change, consultation or timetable as of September 7. The talks signal the first serious pressure on a ban that has stood since 2019.

Industry representatives reportedly argued that British consumers are already accessing overseas platforms such as Kalshi and Polymarket, often bypassing geographic restrictions entirely. The FCA has not published independent figures confirming the scale of that activity, leaving the discussion informed by industry claims rather than regulator data.

A ban rooted in consumer harm

The FCA permanently prohibited firms from selling binary options to retail consumers in April 2019. The regulator’s position has remained consistent: these contracts resemble gambling, carry a high risk of losses and are difficult for consumers to value accurately. Prediction contracts linked to financial and certain climate events continue to be classified as binary options under the FCA’s published position.

Prediction markets let users trade contracts that pay a fixed amount if an event occurs and nothing if it does not, a payoff structure that predates blockchain infrastructure by decades but has been reborn onchain with continuous trading. Financial examples cover interest rates, stock indexes and economic data releases. The product structure is what places them squarely in the FCA’s binary options perimeter, regardless of the event-themed branding that platforms use.

The regulatory map is further complicated by a division of authority. The FCA regulates contracts tied to financial and certain climate events, while sports, political and other non-financial contracts generally fall under the Gambling Commission. A platform seeking to offer multiple contract categories could need approvals from both regulators.

The Gambling Commission drew its own line in February, stating that many current prediction platforms would probably meet the legal definition of a betting intermediary, a category whose core structure the commission compares to a betting exchange. It also warned unlicensed operators against targeting or transacting with consumers in Great Britain, noting that operating without an appropriate gambling licence can constitute a criminal offence.

The offshore drain

The subtext of the FCA talks is the growth of prediction markets in the United States. Kalshi operates as a federally regulated designated contract market, while Polymarket has built substantial blockchain-based activity around elections, economics and other events. U.S. political scrutiny has followed, including lawmaker investigations of suspicious prediction-market wagers connected with military events and possible access to non-public government information.

British participation in these platforms, whether openly or through virtual private networks, places consumers outside the protections that apply to authorized domestic firms. Depending on the platform and product, customers may lack access to domestic complaint procedures, the Financial Ombudsman Service or the Financial Services Compensation Scheme. That protection gap cuts both ways in the policy argument: it is either a reason to ban harder or a reason to bring the activity onshore under supervision.

Robinhood secured its UK crypto registration earlier this year ahead of the new FCA rules, and its prediction-market push in the United States, including leveraged contracts and sports markets, shows how far product suites have evolved while British rules stood still. If UK restrictions ease, the entry queue would likely be long.

The FCA has not committed to either path. The discussions have produced no public consultation, no proposed rule and no implementation date, and the regulator’s latest published guidance still treats financial prediction contracts as prohibited binary options for retail consumers.

Context from a busy UK regulatory season

The prediction market review lands during an unusually active period for British crypto regulation. The FCA’s new crypto gateway regime, with its September 30 deadline for existing firms seeking authorization, has dominated the compliance calendar, while major platforms including Robinhood have secured UK crypto registrations ahead of the new rules.

Any movement on prediction markets would likely follow the same pattern: consultation, feedback, and final rules phased over quarters rather than weeks. For Kalshi, Polymarket and other platforms watching from abroad, even the existence of talks represents progress after seven years of a flat ban.

For now, the status quo holds. Financial prediction markets remain off-limits to British retail consumers, the Gambling Commission’s betting-intermediary guidance stands, and the FCA weighs whether the cost of prohibition is simply pushing activity beyond its reach. As of the time of writing, Bitcoin trades near 79,300 USD, Ethereum near 2,497 USD, and Solana near 105 USD.