The UK's Financial Conduct Authority (FCA) has reportedly held discussions with trading platforms about relaxing its ban on offering financial prediction markets to retail investors, according to a report by The Times. The talks come as growing numbers of UK consumers turn to overseas platforms to access these products, prompting the regulator to revisit a restriction that has been in place since 2019.
Prediction markets allow users to take positions on the binary outcome of future events, spanning categories such as economics, sports, and weather. The FCA classifies contracts linked to financial and certain weather-related events as binary options, and their sale to retail investors has been prohibited in the UK since 2019.
Regulatory position and industry pressure
Despite the reported talks, the FCA's public stance continues to support the existing restriction. Its latest perimeter report stated that the ban remained appropriate given the speculative nature of the contracts and the associated risk of consumer harm, while acknowledging scope for further work on market access and clarification of the regulatory boundary.
Industry participants have been lobbying regulators for a change, presenting evidence that millions of UK consumers already use overseas prediction platforms, The Times reported. In addition, home access these platforms by circumventing geographic restrictions through virtual private networks (VPNs), a workaround that leaves them without UK consumer protections.
The review follows an FCA discussion paper on retail investment rules, which noted that prediction products may fall within the scope of the binary-options ban, and asked whether speculative investment products should be regulated according to their underlying risk profile rather than how they are labelled.
Market growth and competitive landscape
Demand for prediction markets has expanded significantly. According to figures cited by The Times, Bernstein expects total prediction-market trading volume to rise from USD 51 billion in 2025 to USD 240 billion this year. Kalshi has been valued at USD 22 billion, while Polymarket has been valued at USD 21 billion, reflecting increased investor interest in the sector. Coinbase, Robinhood and DraftKings have also launched prediction market products, broadening the competitive field beyond dedicated platforms.
Any platform seeking to offer a comprehensive range of prediction contracts in the UK would need to clear two separate regulatory hurdles. The FCA would need to grant permission for financial event contracts, while sports and political prediction markets fall under the remit of the Gambling Commission, requiring a separate gambling licence.
The outcome of the FCA's deliberations could shape how UK consumers access prediction markets going forward, and may also influence whether platforms currently operating outside UK jurisdiction seek formal authorisation to serve the market directly.
