In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted CFTC oversight for licensed venues, the European Union classifies them as financial instruments under MiCA, whilst numerous jurisdictions across Asia enforce comprehensive prohibitions. Traders must verify compliance with their local regulatory environment before participating.
The prediction market regulation environment has undergone significant transformation over the preceding twenty-four months. Once characterised by legal ambiguity, the sector now features increasingly defined rules with distinct regional winners and restrictions. This overview examines the current regulatory landscape across major markets in 2026.
United States: The CFTC Era
The Commodity Futures Trading Commission (CFTC) has served as the principal regulatory authority in America following its 2023 enforcement initiatives. Notable recent developments include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), lawfully providing event-based contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 after operating without proper authorisation. Following this resolution, American users cannot directly access the platform
- Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden permissible prediction market activities 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 structure for this sector. Prediction markets employing blockchain-based tokens fall under crypto-asset service rules, necessitating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to safeguarding standards, identity verification protocols, and reserve requirements
- Publication of detailed disclosures for tokens classified as asset-referenced instruments
To date, no leading prediction market has secured complete MiCA authorisation, although multiple entities have lodged applications with regulators in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction market operators individually based on their specific characteristics. Platforms categorised as gambling activities operate under the Gambling Commission's jurisdiction; those structured as financial derivatives fall within FCA oversight. Betfair's event-based offerings maintain a gambling licence, whilst emerging crypto-denominated platforms navigate an uncertain regulatory pathway.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling statutes (Penal Code Sections 185-187), with limited exceptions for state-sanctioned lottery schemes
- South Korea — similarly restricted under the National Sports Promotion Act and relevant criminal statutes
- Australia — subject to state-based gambling controls. The Interactive Gambling Act 2001 (as amended in 2017) prevents offshore operators from serving Australian customers
- Singapore — the Remote Gambling Act 2014 restricts the majority of internet-based prediction market activities
Country-by-Country Status Table
| Country | Status | Key Regulator |
| USA | Legal (regulated) | CFTC |
| EU (MiCA) | Legal with CASP license | 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 any trading activity on a prediction market platform, confirm three essential points: (1) Does the operator hold authorisation in your location? (2) Which tax rules govern your earnings? (3) What safeguards protect your funds should the operator encounter difficulties? Our comprehensive tax reference provides additional guidance on these matters.
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