UK FCA Weighs Lifting Retail Prediction Markets Ban
The UK Financial Conduct Authority has barred firms from selling binary options to retail customers since 2019, citing the products’ risks and the potential for significant consumer losses. Prediction-market contracts tied to outcomes such as elections or economic data can fall within a similar regulatory perimeter, effectively preventing platforms including Kalshi and Polymarket from formally serving British retail traders.
As of September 2026, the FCA is reviewing whether to ease the roughly seven-year-old restriction and has opened discussions with prediction-market operators, according to media reports. Some UK users currently access offshore platforms through virtual private networks. A rule change could create a regulated route for retail participation in event contracts, although the watchdog has not announced a final decision, implementation timetable or detailed consumer-protection framework.
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4 original reportsThe Backstory
The history behind this eventEU Regulator Warns Prediction Markets May Face Retail Binary Options Ban
Prediction markets settle contracts based on yes-or-no outcomes for future events, giving investors either a fixed payout or no return. If an event contract is deemed a financial instrument based on the question it poses, it is classified as a derivative. Several EU countries have replaced ESMA’s temporary ban with permanent measures since 2019, making Kalshi’s and Polymarket’s ability to serve retail clients critical to their continued presence in Europe.
The European Securities and Markets Authority (ESMA) said on July 3, 2026, that companies must assess event contracts individually. Any binary contract that qualifies as a financial instrument may not be marketed, distributed or sold to retail clients. Firms offering such contracts exclusively to non-retail clients must still obtain authorization as investment firms. Kalshi and Polymarket could be forced to modify their products or exit the market, while national regulators are set to strengthen cooperation on cross-border enforcement.
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