UK FCA Considers Easing Retail Access to Prediction Markets; Kalshi and Polymarket Valued at $22B, $21B

The UK's Financial Conduct Authority is reportedly in talks with trading platforms about potentially lifting its 2019 ban on retail access to financial prediction markets, according to a report by The Times. The regulator is reconsidering its policy as British consumers increasingly bypass geographic restrictions using virtual private networks (VPNs) to access overseas platforms including market leaders Kalshi and Polymarket. The FCA's public position continues to support the restriction, with its latest perimeter report stating the ban remains appropriate because of the speculative nature of the contracts and the risk of consumer harm, while leaving open the possibility of further work on access or clarification of the regulatory boundary. However, industry participants have been lobbying for a change, presenting officials with evidence that millions of Britons are using overseas prediction platforms. The review follows an FCA discussion paper on retail investment rules, which said prediction products may fall within the binary-options ban and asked whether speculative investments should be regulated according to their risks rather than their product labels. Demand for prediction markets has surged dramatically. Bernstein expects total prediction-market trading volume to rise from $51 billion in 2025 to $240 billion in 2026. The two dominant platforms have attracted significant investor interest: Kalshi raised capital at a $22 billion valuation in May 2026, while Polymarket recently completed a $1 billion funding round at a $21 billion valuation. Coinbase, Robinhood, and DraftKings have also introduced prediction products, signaling growing mainstream interest in the sector. Any platform seeking to offer a broad range of contracts in the UK would face two regulatory hurdles: the FCA would need to permit financial event contracts, while sports and political markets fall under the Gambling Commission and would require a gambling license. No specific timeline has been announced for any potential regulatory change. If the FCA proceeds with easing restrictions, it could open a significant new market for prediction platforms and legitimize a sector that has operated in a regulatory gray area across much of Europe. The move would also align the UK with more permissive approaches in the United States, where Kalshi has secured CFTC approval and Polymarket operates through a decentralized structure registered in the Bahamas. For British retail investors, it would provide regulated access to a rapidly growing asset class that has already attracted billions of dollars in trading volume and venture capital investment.
#GateLaunchesTrenchesWith0GasFee