In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-centred approach for licensed venues, the European Union classifies them as financial instruments under MiCA, whilst numerous jurisdictions in Asia enforce comprehensive prohibitions. Familiarising yourself with applicable local legislation is critical before participating in any market.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying an ambiguous legal space, the sector now operates within increasingly defined regulatory parameters, with distinct outcomes emerging across different regions. This article surveys the international regulatory landscape as it stands in mid-2026.
United States: The CFTC Era
Since its enforcement initiatives in 2023, the Commodity Futures Trading Commission (CFTC) has emerged as the principal oversight body in America. Notable developments include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), permitting lawful distribution of event-based contracts to American participants
- Polymarket — reached a settlement agreement with the CFTC in 2022 following unauthorised operations. Subsequently, American users have been prevented from accessing the platform directly
- Legislative momentum — lawmakers have advanced several proposals during 2025-2026 seeking to broaden the permissible scope of prediction market activities beyond election-related subject matter
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 under the crypto-asset services classification, necessitating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering procedures, customer verification protocols, and prudential standards
- Publication of technical documentation for tokens designated as asset-referenced instruments
To date, no leading prediction market operator has secured complete MiCA authorisation, though multiple entities maintain active 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 categorised as gambling activities come under the purview of the UK Gambling Commission; those structured as financial derivative instruments fall within FCA jurisdiction. Betfair operates its event-based offerings under a gambling authorisation, whereas emerging crypto-denominated platforms encounter regulatory ambiguity.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling legislation (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — likewise restricted pursuant to the National Sports Promotion Act and Criminal Code provisions
- Australia — subject to state-based gambling regulations. Overseas operators face restrictions under the Interactive Gambling Act 2001 (revised 2017)
- 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 licence | 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 three essential elements: (1) Does the operator hold appropriate regulatory status in your location? (2) What tax consequences arise from your earnings? (3) What safeguards protect your capital should the operator encounter financial difficulties? Consult our prediction market tax guide for comprehensive tax information.
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