In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-regulated model, the European Union classifies them as financial instruments under MiCA, whilst numerous countries throughout Asia enforce comprehensive prohibitions. Before engaging in any trading activity, it is critical to familiarise yourself with the applicable rules in your location.
The prediction market regulation environment has undergone significant transformation over the past twenty-four months. What previously occupied murky legal territory has now crystallised into a structured sector with distinct regional winners and losers. This article surveys the international regulatory landscape as it stands in mid-2026.
United States: The CFTC Era
The Commodity Futures Trading Commission (CFTC) has served as the leading regulatory authority in the United States following its 2023 enforcement campaign. Notable milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), lawfully providing event contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 following unauthorised operation. Thereafter, American users have been prevented from accessing the platform directly
- Legislative momentum — numerous proposals advanced between 2025 and 2026 aimed at broadening the permissible scope of prediction market activities beyond election-related contracts
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) directive, which became fully operational in December 2024, establishes the EU's regulatory architecture. Prediction markets that employ cryptocurrency tokens fall within the crypto-asset services category and must satisfy:
- Registration as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, know-your-customer procedures, and solvency standards
- Publication of technical documentation for tokens designated as asset-referenced tokens
To date, no leading prediction market has secured complete MiCA authorisation, though several entities have lodged applications with regulators in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their specific characteristics. Platforms classified as gambling activities fall under the UK Gambling Commission's remit; those structured as financial derivatives fall under the FCA's oversight. Betfair operates its event markets pursuant to a gambling licence, whereas emerging blockchain-based platforms remain in regulatory limbo.
Asia-Pacific
- Japan — prediction markets are effectively prohibited under gambling statutes (Penal Code Articles 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — likewise restricted under the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gambling frameworks. The Interactive Gambling Act 2001 (as amended in 2017) blocks offshore operators from servicing Australian customers
- Singapore — the Remote Gambling Act 2014 restricts the majority of internet-based prediction market offerings
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 on a prediction market, confirm the following: (1) Does your jurisdiction permit the platform to operate? (2) Which tax rules govern your returns? (3) What safeguards protect your funds if the operator becomes insolvent? Our prediction market tax guide offers comprehensive information on these matters.
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