In this guide
Key takeaway: Regulatory treatment of prediction markets diverges significantly across borders. The United States has adopted a CFTC-supervised model, the European Union classifies them as financial instruments under MiCA, whilst numerous countries in Asia enforce comprehensive prohibitions. Familiarity with your jurisdiction's legal framework is critical before participating in any market.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying murky legal territory, the sector now features increasingly codified rules with distinct regional winners and losers. This overview charts the worldwide regulatory picture as it stands in mid-2026.
United States: The CFTC Era
America's primary overseer, the Commodity Futures Trading Commission (CFTC), has held regulatory authority following its pivotal 2023 enforcement campaign. Notable milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), lawfully distributing event contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 for unlicensed operation. Subsequently, American users face geographical restrictions preventing direct platform engagement
- Legislative momentum — numerous proposals tabled during 2025-2026 seeking to broaden permissible prediction market activities beyond election-centred categories
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation became fully operational in December 2024, establishing the EU's governing structure. Prediction markets employing cryptographic tokens fall within crypto-asset services, mandating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to safeguarding standards, identity verification protocols, and reserve requirements
- Published documentation for tokens designated as asset-referenced instruments
To date, no leading prediction market has secured complete MiCA authorisation, though several maintain active licensing applications across France and Germany.
United Kingdom
Britain's Financial Conduct Authority (FCA) evaluates prediction markets individually based on their characteristics. Operators categorised as gaming enterprises answer to the UK Gambling Commission; those operating as financial derivatives fall under FCA jurisdiction. Betfair's event offerings function under gambling authorisation, whereas emerging blockchain-based platforms encounter regulatory ambiguity.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling statutes (Penal Code Articles 185-187), with limited exemptions reserved for state-sanctioned lottery schemes
- South Korea — equally restricted via the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to jurisdiction-specific gaming rules. The Interactive Gambling Act 2001 (as amended in 2017) prevents offshore operators from serving local users
- Singapore — the Remote Gambling Act 2014 eliminates most 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 commencing any trading activity, confirm three essential points: (1) Does your location permit the platform's operations? (2) Which tax rules govern your returns? (3) What safeguards protect your capital should the operator encounter difficulties? Our comprehensive prediction market tax guide addresses these considerations in depth.
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