In this guide
Key takeaway: Regulatory frameworks for prediction markets diverge significantly across jurisdictions. The United States has adopted a CFTC-regulated model, the European Union classifies them as financial instruments under MiCA, whilst numerous Asian territories enforce comprehensive prohibitions. Verifying compliance with your regional requirements is critical before engaging in any trading activity.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying an ambiguous legal space, the sector now operates within increasingly defined rules, creating distinct regional winners and losers. This overview outlines the current global regulatory position as it stands in mid-2026.
United States: The CFTC Era
The Commodity Futures Trading Commission (CFTC) has functioned as the principal American regulator following its enforcement initiatives in 2023. Notable regulatory developments include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), lawfully providing event contracts throughout the United States
- Polymarket — reached a settlement with the CFTC in 2022 after operating without proper authorisation. American participants have subsequently been restricted from accessing the platform directly
- Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden the permissible scope of prediction markets beyond election-related offerings
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation, operational throughout the EU since December 2024, establishes the regulatory foundation. Prediction markets employing cryptographic tokens fall within the crypto-asset services category, necessitating:
- Authorisation as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, know-your-customer procedures, and reserve requirements
- Publication of technical documentation for tokens designated as asset-referenced instruments
To date, no leading prediction market operator has secured complete MiCA authorisation, though several maintain active applications with regulators in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction market platforms individually based on their operational characteristics. Operators classified as gambling entities come under the UK Gambling Commission's purview; those offering financial derivatives products fall within FCA jurisdiction. Betfair's event-based offerings operate pursuant to a gambling licence, whereas emerging token-based platforms navigate an unclear regulatory environment.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited under gambling statutes (Penal Code Sections 185-187), except for state-sanctioned lottery schemes
- South Korea — similarly restricted by the National Sports Promotion Act and relevant criminal statutes
- Australia — falls under state-based gambling rules. The Interactive Gambling Act 2001 (as amended in 2017) prevents offshore platforms from operating within Australian territory
- Singapore — the Remote Gambling Act 2014 restricts the majority of online prediction market offerings
Country-by-Country Status Table
| Country | Status | Key Regulator |
| USA | Legal (regulated) | CFTC |
| EU (MiCA) | Legal with CASP licence | National CAs + ESMA |
| UK | Grey area | FCA / Gambling Commission |
| Japan | Banned | National Police Agency |
| Australia | Restricted | ACMA |
| Canada | Provincial regulation | Provincial gaming authorities |
What This Means for Traders
Prior to commencing trading on any prediction market platform, confirm three essential points: (1) Does the operator hold valid licensing within your territory? (2) What fiscal obligations attach to your returns? (3) What investor safeguards apply in case of platform insolvency? Our comprehensive regulatory guidance provides detailed information on these considerations, and our prediction market tax guide addresses fiscal obligations across major jurisdictions.
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