The UK’s Financial Conduct Authority is approaching a key stage in its review of retail investment rules, with the outcome potentially determining whether prediction markets can gain a regulated foothold in Britain.
Prediction markets that are structured as financial products currently face a major obstacle in the UK because some contracts can fall within the definition of binary options. The FCA permanently prohibited firms from selling, marketing or distributing binary options to retail consumers in April 2019, citing substantial risks of financial losses, poor industry conduct and difficulties for consumers in understanding the products.
The regulator is now examining whether its wider treatment of speculative investments remains appropriate. That process has brought event-based contracts, sometimes described by the FCA as “horizon contracts”, back into the regulatory debate.
FCA review opens door to regulatory change
In December 2025, the FCA published a discussion paper on expanding consumer access to investments. Among the areas examined was the inconsistent treatment of speculative products that can carry similar risks but are regulated under different sets of rules.
The paper specifically identified contracts allowing consumers to speculate on outcomes such as economic indicators, political developments, commodity prices or other future events. Depending on their structure, the FCA said such products may qualify as binary options and therefore fall under the existing retail ban.
Rather than immediately proposing to legalise prediction markets, the regulator asked whether speculative investments should be governed more consistently according to their underlying risk and return characteristics instead of their product labels.
The consultation period for the discussion paper has closed, and the FCA’s May 2026 Regulatory Initiatives Grid states that a feedback statement is expected during the third quarter of 2026. Further consultation could follow depending on the conclusions reached.
That timeline has placed September under particular scrutiny from firms interested in bringing prediction-market products to UK consumers.
Industry pushes case for regulated access
Financial-sector stakeholders have been lobbying for the UK restrictions to be reconsidered, according to reporting by The Times. Industry representatives have argued that significant numbers of British consumers are already accessing overseas prediction platforms through VPNs, leaving activity outside the direct supervision of UK regulators.
That argument has become more prominent as prediction markets have expanded rapidly internationally, led by platforms including Kalshi and Polymarket. Their growth has intensified debate over whether prohibiting domestic access provides stronger consumer protection or simply shifts demand towards offshore services.
However, any FCA decision would not automatically create a single regulatory framework covering every type of prediction market.
Financial contracts would remain primarily within the FCA’s remit, while platforms facilitating bets on areas such as politics or sporting events could also fall under gambling legislation.
The UK Gambling Commission requires businesses providing online gambling services to British consumers to hold an appropriate operating licence. A remote betting intermediary licence applies when a company brings two or more parties together to bet without itself becoming liable for the wager, the model commonly associated with betting exchanges.
As a result, prediction-market operators seeking broad UK coverage could ultimately face separate financial-services and gambling requirements depending on how individual contracts are designed.
For now, the FCA has not announced that the 2019 binary-options prohibition will be removed. Its forthcoming feedback on consumer investment access is instead expected to provide the clearest indication yet of whether Britain is prepared to reconsider the regulatory barriers currently keeping financial prediction markets away from retail investors.