In this guide
Key takeaway: Regulatory frameworks governing prediction markets differ substantially across regions. The United States has adopted a CFTC-supervised model, the European Union classifies them as financial instruments under MiCA, whilst numerous jurisdictions in Asia enforce comprehensive prohibitions. Familiarising yourself with applicable local legislation before participating is critical.
The prediction market regulatory environment has undergone substantial transformation over the preceding twenty-four months. Previously occupying uncertain legal territory, the sector now features increasingly defined rules with distinct regional winners and losers. This overview examines the worldwide regulatory position as it stands in 2026.
United States: The CFTC Era
Since its enforcement campaigns in 2023, the Commodity Futures Trading Commission (CFTC) has served as the principal US oversight body. Notable regulatory milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), permitting lawful distribution of event contracts to American participants
- Polymarket — reached settlement with the CFTC in 2022 following unauthorised operations. Subsequently, American users face geographic restrictions preventing direct platform access
- Legislative momentum — numerous proposals advanced during 2025–2026 seeking to broaden permissible prediction market activities beyond election-focused instruments
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation, operational throughout the EU since December 2024, establishes the governing structure. Prediction markets employing cryptographic tokens fall under crypto-asset service classifications, necessitating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification procedures, and minimum capital standards
- Technical documentation for tokens designated as asset-referenced instruments
To date, no established prediction market has secured complete MiCA authorisation, though several entities maintain pending applications across French and German regulatory bodies.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction market applications individually. Platforms classified as gambling operations fall under the UK Gambling Commission's remit; those structured as financial derivatives answer to the FCA. Betfair's event offerings maintain gambling commission approval, whereas emerging blockchain-based platforms encounter regulatory uncertainty.
Asia-Pacific
- Japan — prediction markets encounter effective prohibition under gambling statutes (Penal Code Sections 185–187), with restricted carve-outs for state-sanctioned lottery schemes
- South Korea — likewise prohibited pursuant to the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-administered gambling rules. The Interactive Gambling Act 2001 (as amended in 2017) blocks offshore platform access
- Singapore — the Remote Gambling Act 2014 restricts virtually all 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
When considering participation in any prediction market, confirm three essential points: (1) Does your jurisdiction permit the platform's operation? (2) Which tax implications apply to your returns? (3) What safeguards protect your funds should the operator encounter difficulties? Consult our prediction market tax guide for comprehensive fiscal information.
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