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.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
The 2019 ban made sense for binary options scams, but a contract on the next rate decision is closer to a hedge than a bet. Lumping both under one perimeter is the lazy part.
A hedge against which portfolio though? Scroll the actual volume on these platforms and it is elections and sports. Rate decision markets are thin, so the hedge argument covers a sliver of retail activity.
^ rate decision contracts are a rounding error and everyone in westminster knows it. this fight is about football and election money, not hedging
bet they keep the binary options label from the april 2019 ban and just carve out an exception for financial event contracts. that way nobody at the FCA has to admit the perimeter was drawn wrong six years ago
the carve out writes itself but the gambling commission still classifies these as betting products. the fca cant wave event contracts through while that overlap exists
carve out is the obvious play. same product, new label, zero new protections for anyone betting on here
the gambling commission already licenses betting exchanges for sport, a political events licence is a small step from there. the doom about zero protections assumes they copy the worst draft
brits are already on Polymarket through VPNs and the FCA knows it. the 2019 ban just pushed everything offshore with zero protections
two regulators one product. the gambling commission literally called these platforms betting intermediaries in february and still nothing happened
wildest part is the FCA openly admits it has no numbers on how many brits are on kalshi or polymarket via vpn. industry says loads, regulator says shrug, and that gap is the entire basis for reopening talks
and the times piece is sourced to industry reps too. the whole case for reopening is built on vpn estimates nobody outside the platforms can verify
vpn estimates from the platforms themselves are the entire evidentiary basis. regulators outsourcing diligence to kalshi marketing, cool cool
the FCA could demand UK traffic data from the exchanges tomorrow. choosing industry vpn estimates instead is a choice
the vpn thing cuts both ways tho. if the FCA cant even measure how many brits are on kalshi or polymarket, it cant claim the ban is protecting anyone either. half the case for reopening writes itself
Same issue every time though. No timetable and no consultation, just industry claims about overseas usage doing all the work.
^ this. no timetable, no consultation, just a Times story about talks. call me when actual policy paper lands
exactly, and Kalshi and Polymarket are not exactly hiding from UK users either. regulation by omission at this point
polymarket volumes on uk politics in 2024 were big enough that the offshored demand is already proven. question is whether the FCA wants the tax data or keeps pretending vpns dont exist
The tax point is underrated. Treasury sees kalshi and polymarket sponsoring premier league kits while the FCA pretends the market does not exist. Money talks eventually
its not tax data they want, its the sponsorship money staying offshore. premier league kits covered in kalshi logos while uk regulators deliberate is getting awkward
^ exactly. kalshi on a premier league sleeve while the FCA admits it has zero traffic data. treasury will force this open long before the FCA wants to
consultation paper by spring, actual rules by 2028 at this pace. meanwhile the vpn crowd keeps growing every month they deliberate
spring consultation is optimistic. the 2019 ban took two years from announcement to enforcement, reopening will drag longer than the kalshi hype cycle lasts
spring consultation is the optimistic case and even that assumes the gambling commission folds first. two regulators, one product, zero urgency
2019 to enforcement was two years, and that was banning something. reopening means fresh perimeter legislation references, that timeline makes spring look like a joke
Kalshi sponsoring premier league kits was always going to be the moment this stopped being a fringe FCA question. Once the branding is in every stadium the offshored demand is very public