At the start of 2026, there was a widely held expectation that US-based prediction market operators would begin expanding internationally, with Great Britain being an obvious target. That expansion has not materialised to date, as the sector has become increasingly preoccupied with regulatory challenges on its home turf.

Indeed, recent months have seen a marked escalation in scrutiny from US state regulators. While federal oversight via the Commodity Futures Trading Commission (CFTC) remains central to the legal positioning of prediction market operators, individual states, notably Nevada and Arizona, have taken steps to disrupt activity where prediction contracts resemble sports wagering. In Nevada, regulators have issued cease-and-desist orders, and Kalshi has been temporarily barred from offering sports, entertainment and election contracts, following an order obtained by the Nevada Gaming Control Board.

Furthermore, a bipartisan bill has been introduced in the US Senate, seeking to prohibit CTFC-regulated prediction market platforms from offering sports-related event contracts and contracts that resemble casino-style gambling. Those opposing prediction markets argue that the products are really gambling in disguise, but with few safeguards and that operators are exploiting a loophole in commodities law to provide online sports betting in states where it is illegal.

A rapidly growing market

Despite growing regulatory pressure in the US, prediction markets have experienced significant growth. Their appeal lies in their simplicity; users stake on binary outcomes, “yes/no” propositions, across a wide range of subjects, including elections, financial markets, commodities and sports. Estimates suggest that total notional trading volume (the face value of all contracts traded) in 2025 reached between $44-64 billion, with Polymarket and Kalshi dominating the industry. And that’s without taking into account the $1bn Kalshi recently raised at a valuation of $22bn...

The legal argument in the US

The central legal argument advanced by US prediction market operators is that their products are not gambling, but financial instruments, specifically ‘event contracts’ that are regulated under federal commodities law and not state gambling law. Where contracts are listed on, or cleared through, a CFTC-regulate exchange or designated contract market, operators argue that federal law pre-empts state gambling regulation. However, this position is not universally accepted, particularly where contracts resemble sports betting.    

New entrants to the market

The growing sector in the US is now attracting new participants. Crypto.com has explored prediction-style products within a regulated framework, while Robinhood has partnered with Kalshi to distribute event contracts to retail users. FanDuel and DraftKings have indicated an launched prediction markets in partnership with regulated exchanges, in US states where remote sports betting is not currently permitted.

Great Britain: A closed door?

In Great Britain, the regulatory position is clearer, as peer-to-peer betting is not a novel concept. Betfair launched the first peer-to-peer betting platform in the UK in 2000 and exchange operators are licensed under the Gambling Act 2005 as betting intermediaries.  

The Gambling Commission has already issued a pre-emptive warning to prediction market operators thinking of entering the British market. In February 2026, Brad Enright, Director of Strategy, said prediction market operators offering services to British consumers would fall squarely within the statutory definition of betting. A person facilitating bets between others would require a licence as a betting intermediary. 

The Commission also warned prediction market operators to take steps ensuring they are not targeting or transacting with consumers in Great Britain, which is a criminal offence without a licence. Another issue to consider is that some operators, notably Polymarket, accept cryptocurrency deposits, while this is not currently approved as an acceptable payment method by the Gambling Commission. 

The financial services boundary

One unresolved question is whether certain prediction markets, particularly those linked to financial indices, could fall within financial rather than gambling regulation. Certain financial contracts, such as bets structured as regulated derivatives, are regulated activities under FSMA 2000 and are specifically excluded from the definition of a bet. 

These activities fall within the remit of the Financial Conduct Authority (FCA). However, wagers with a binary payoff, even if the subject is a financial index, are still likely to be characterised as betting rather than a derivative. The FCA banned the sale of binary options on the price of stocks, currencies and commodities to retail consumers in 2019, stating that they were “gambling products dressed up as financial instruments.” It is therefore apparent that prediction market bets on financial indices could carry similar risks.      

Commercial viability

The Gambling Commission has expressed scepticism as to whether the commercial drivers underpinning US growth of prediction markets will translate to GB, where remote sports betting is well established and available under a single overarching regulatory framework.  

However, some operators will not be deterred by this view. Matchbook has been operating a betting exchange in Britain since 2014 and has recently added Yes/No prediction markets to its offering. It is likely more operators will follow this lead.

My personal view? Despite all the hype, I don’t expect this category will ultimately take a significant share of the British gambling market.