In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-supervised approach, the European Union classifies them as financial instruments under MiCA, whilst numerous countries in Asia enforce strict prohibitions. Checking your jurisdiction's requirements before participating in any market is crucial.
The prediction market regulation environment has undergone significant transformation over the last twenty-four months. Previously occupying an ambiguous legal space, the sector now features increasingly defined rules with distinct regional winners and losers. This overview examines the international regulatory landscape as it stands in the middle of 2026.
United States: The CFTC Era
Since its enforcement initiatives in 2023, the Commodity Futures Trading Commission (CFTC) has served as the dominant regulatory authority across America. Notable recent developments include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), permitting the lawful provision of event-based contracts to American participants
- Polymarket — reached a settlement agreement with the CFTC in 2022 after operating without proper authorisation. Following this resolution, American users cannot access the platform directly
- Legislative momentum — numerous proposals have been tabled during 2025-2026 seeking to broaden the permissible scope of prediction markets beyond election-related subjects
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) directive, operational throughout the EU from December 2024 onwards, establishes the regulatory foundation. Platforms offering prediction markets denominated in cryptographic tokens must comply with crypto-asset service rules, including:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering procedures, identity verification, and reserve fund rules
- Publication of technical documentation for tokens designated as asset-referenced instruments
To date, no established prediction market operator has secured full MiCA authorisation, though several entities have submitted applications to regulators in France and Germany.
United Kingdom
The UK's Financial Conduct Authority (FCA) evaluates prediction market operators individually. Operators classified as gambling businesses fall under the Gambling Commission's remit; those offering financial derivative products answer to the FCA instead. Betfair's event-based offerings function under a gambling authorisation, whereas emerging blockchain-based competitors navigate uncertain regulatory waters.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling statutes (Penal Code Sections 185-187), with limited carve-outs reserved for state-run lotteries
- South Korea — likewise prohibited pursuant to the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gambling rules. The Interactive Gambling Act 2001 (as amended in 2017) prevents overseas operators from serving Australian customers
- Singapore — the Remote Gambling Act 2014 restricts the majority of internet-based prediction market activities
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 these essential points: (1) Does your region permit the platform's operation? (2) What fiscal responsibilities arise from your returns? (3) What safeguards protect your funds if the operator becomes insolvent? For comprehensive information on tax implications, consult our prediction market tax guide.
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