UK financial watchdog weighs lifting prediction markets ban: Report
Companies offering binary options for retail investors have been barred from selling, marketing and distributing products in the UK since 2019 following a directive from the FCA.
The UK's Financial Conduct Authority (FCA) is considering lifting a ban on prediction markets for retail investors, according to a report from The Times. The ban, implemented in April 2019, prohibits companies from selling, marketing, or distributing binary options to retail consumers. Prediction markets allow investors to bet on the outcome of events, such as sports, politics, and weather, and are considered gambling products disguised as financial instruments by the FCA.
Due to recent advancements in technology, many UK retail investors have been circumventing the ban by using VPNs to trade on platforms like Kalshi and Polymarket, which are based in the US. Bernstein Research estimates that the global prediction market industry could reach $240 billion in trading volume by 2026 and $1 trillion by 2030.
Should the FCA reverse the ban, these prediction market platforms may face similar legal challenges as they currently encounter in the US, where state gaming authorities are suing Kalshi over sports event contracts. Recently, New Jersey officials have petitioned the Supreme Court to hear their case against Kalshi, which may lead to a clarification of the differences between state and federal authorities regarding prediction markets.
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