In this guide
Key takeaway: Prediction market regulation differs substantially across regions. The United States has adopted CFTC-regulated venues, the European Union classifies them as financial instruments under MiCA, whilst numerous Asian jurisdictions enforce strict prohibitions. Checking your jurisdiction's requirements before participating is critical.
The prediction market regulation environment has undergone substantial transformation over the preceding two years. Once occupying murky legal territory, the sector now features increasingly defined rules with distinct regional winners and losers. This overview outlines the worldwide regulatory picture as it stands in mid-2026.
United States: The CFTC Era
Since its 2023 enforcement actions, the Commodity Futures Trading Commission (CFTC) has served as the principal US regulatory body. Notable recent developments include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), legitimately furnishing event contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 following unlicensed operation. Subsequently, American participants cannot directly access the platform
- Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden lawful prediction market activities beyond election-focused matters
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation, which took full force in December 2024, establishes the EU's approach. Prediction markets employing crypto tokens fall under crypto-asset services classification, necessitating:
- Registration as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering procedures, identity verification, and reserve standards
- Technical documentation for any token designated as an asset-referenced token
To date, no leading prediction market has secured complete MiCA authorisation, though several maintain active applications in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their characteristics. Platforms categorised as gaming come under the UK Gambling Commission's purview; those categorised as financial derivatives fall under FCA oversight. Betfair's market offerings operate via a gaming authorisation, whereas emerging blockchain-based platforms encounter regulatory uncertainty.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited under gambling statutes (Penal Code Articles 185-187), save for restricted cases involving state-sanctioned lottery schemes
- South Korea — likewise forbidden through the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to jurisdiction-specific gaming rules. The Interactive Gambling Act 2001 (updated 2017) blocks foreign platforms from operating locally
- 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 establishing any position in a prediction market, confirm the following: (1) Does your region permit the platform's operations? (2) What fiscal implications apply to your earnings? (3) What safeguards protect you should the operator encounter difficulties? For comprehensive information on tax considerations, consult our prediction market tax guide.
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