London, Sept 13 (Finances Review) – The UK Financial Conduct Authority (FCA) has contacted firms that run prediction‑market platforms as part of an internal review on whether to relax a ban on binary‑option contracts for retail investors. The ban, introduced in April 2019, prohibited the sale, marketing or distribution of binary options – contracts that pay out on a yes/no outcome – to non‑professional UK customers.
The FCA’s outreach follows a report in The Times that the regulator is weighing an amendment to the rule that currently blocks platforms such as Polymarket and Kalshi from offering services to UK‑based retail traders. At the time of the original ban, FCA executive director of strategy and competition Christopher Woolard described binary options as “gambling products dressed up as financial instruments.”
Despite the prohibition, The Times noted that a number of UK retail participants have been using virtual private networks to access US‑based prediction‑market sites, including Kalshi and Polymarket, which operate under US jurisdiction. Bernstein Research, citing industry estimates, projected that total trading volume in the prediction‑market sector could reach roughly $240 billion by 2026 and $1 trillion by 2030.
If the FCA decides to lift the restriction, the platforms could encounter legal challenges similar to those they face in the United States, where several state gaming authorities have filed lawsuits over sports‑event contracts. In New Jersey, officials recently petitioned the state Supreme Court to hear a case against Kalshi, seeking clarification on the interplay between state and federal regulation of prediction markets.
The FCA has not disclosed a timetable for any decision, nor indicated whether any conditions would be attached to a potential rule change. The regulator’s consultation is expected to consider consumer protection, market integrity and the alignment of prediction‑market products with existing gambling and financial‑services legislation.
Stakeholders will be watching the outcome closely, as any regulatory shift could reshape the nascent prediction‑market industry and its access to UK retail capital.
