In this guide
Key takeaway: Regulatory treatment of prediction markets diverges significantly across borders. The United States has adopted a CFTC-supervised model, the European Union classifies them as financial instruments under MiCA, whilst numerous jurisdictions across Asia enforce comprehensive prohibitions. Familiarising yourself with your region's legal framework is critical before participating.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying murky legal territory, the sector now operates within an increasingly codified framework featuring distinct regional winners and losers. This article surveys the worldwide regulatory landscape as it stands in mid-2026.
United States: The CFTC Era
Since its 2023 enforcement campaign, the Commodity Futures Trading Commission (CFTC) has served as the principal regulatory authority across America. Notable milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), lawfully providing event contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 following unlicensed operations. Subsequently, domestic users face geographical restrictions preventing direct participation
- Legislative momentum — lawmakers put forward several proposals during 2025-2026 aimed at broadening the permissible scope of prediction markets beyond election-focused instruments
European Union: MiCA Framework
Since its full implementation in December 2024, the Markets in Crypto-Assets (MiCA) regulation establishes the EU's governance structure. Prediction markets employing cryptographic tokens fall under crypto-asset services classification, mandating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money-laundering protocols, know-your-customer verification, and reserve fund obligations
- Submission of technical documentation for any token designated as an asset-referenced token
To date, no leading prediction market has secured complete 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 according to their specific characteristics. Platforms categorised as gambling activities operate under the UK Gambling Commission's remit; those categorised as financial derivatives fall within FCA jurisdiction. Betfair's event-based offerings function under a gambling permit, whereas emerging blockchain-powered competitors navigate an ambiguous regulatory environment.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling statutes (Penal Code Sections 185-187), save for state-sanctioned lottery schemes
- South Korea — likewise forbidden pursuant to the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gambling frameworks. The Interactive Gambling Act 2001 (as revised in 2017) prevents foreign operators from serving Australian clients
- 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 establishing any position on a prediction market, confirm the following essentials: (1) Does your jurisdiction permit the platform's operations? (2) Which tax liabilities attach to your returns? (3) What safeguards protect your capital should the operator encounter insolvency? Consult our prediction market tax guide for comprehensive tax analysis.
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