In this guide
Key takeaway: Regulatory frameworks governing prediction markets differ substantially across regions. The United States has adopted a CFTC-supervised approach for compliant operators, the European Union classifies them as financial instruments under MiCA requirements, whilst numerous jurisdictions in Asia enforce strict prohibitions. Traders must verify compliance status in their own territory before commencing activity.
The prediction market regulation environment has undergone substantial transformation over recent years. Once occupying ambiguous legal territory, the sector now features increasingly codified rules with distinct geographic winners and losers. This overview examines the current regulatory landscape as it stands in mid-2026.
United States: The CFTC Era
The Commodity Futures Trading Commission (CFTC) has served as the dominant regulatory body in America following its 2023 enforcement initiatives. 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 a settlement with the CFTC in 2022 after operating without proper authorisation. Consequently, American users face geographic restrictions preventing direct participation
- Legislative momentum — lawmakers advanced various proposals during 2025-2026 seeking to broaden the permissible scope of prediction market activities beyond election-related contracts
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) directive, operational throughout the EU since December 2024, establishes the regulatory foundation. Platforms offering prediction markets denominated in cryptocurrency tokens must comply with crypto-asset service standards, including:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, and prudential standards
- Publication of technical documentation for any token classified as an asset-referenced token
To date, no major prediction market operator has secured comprehensive MiCA authorisation, though several 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 operational characteristics. Platforms classified as gambling activities operate under the UK Gambling Commission's remit; those structured as financial derivatives fall under FCA supervision. Betfair's event-based offerings function under a gambling authorisation, whereas emerging blockchain-based platforms navigate considerable regulatory uncertainty.
Asia-Pacific
- Japan — prediction markets face effective prohibition under gambling statutes (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — enforcement under the National Sports Promotion Act and Criminal Act provisions prevents most prediction market operations
- Australia — subject to state-based gambling frameworks. The Interactive Gambling Act 2001 (as amended in 2017) blocks offshore platforms from servicing Australian residents
- 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 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 initiating any trade on a prediction market platform, confirm the following: (1) Does the operator hold valid licensing within your region? (2) Which tax implications apply to your earnings? (3) What safeguards protect your capital if the operator becomes insolvent? Our comprehensive tax resource addresses these considerations in detail.
PolyGram delivers streamlined access to Polymarket liquidity alongside integrated portfolio tracking and streamlined withdrawal functionality. Start trading on PolyGram →