Key takeaway: Regulatory treatment of prediction markets diverges significantly across the globe. The United States has adopted a CFTC-regulated model, the European Union classifies them as financial instruments under MiCA, whilst numerous Asian jurisdictions enforce comprehensive prohibitions. Checking your jurisdiction's requirements before participating is critical.
The prediction market regulation environment has transformed substantially over the last twenty-four months. Once occupying murky legal territory, the sector is now crystallising into a structured ecosystem with distinct regional patterns. This overview surveys the international regulatory picture as it stands in mid-2026.
United States: The CFTC Era
Since its 2023 enforcement campaign, the Commodity Futures Trading Commission (CFTC) has emerged as the dominant regulatory body in 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 for unlicensed operation. Subsequently, American users have been prevented from accessing the platform directly
- Legislative momentum — numerous proposals tabled during 2025–2026 to broaden the permitted scope of prediction markets beyond election-related contracts
European Union: MiCA Framework
Since its full implementation in December 2024, the Markets in Crypto-Assets (MiCA) regulation establishes the EU's approach. Prediction markets employing cryptocurrency tokens fall within the crypto-asset services category and must satisfy:
- Registration as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification, and reserve standards
- Technical documentation for tokens designated as asset-referenced tokens
To date, no leading prediction market has secured complete MiCA authorisation, though several are pursuing approvals in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their characteristics. Platforms categorised as gambling activities come under the UK Gambling Commission's remit; those structured as financial derivatives fall to the FCA's jurisdiction. Betfair's event-based offerings operate under gambling licensing, whereas emerging blockchain-based competitors face regulatory ambiguity.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited under gambling statutes (Penal Code Sections 185–187), save for state-sanctioned lottery schemes
- South Korea — likewise forbidden under 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) blocks overseas operators from serving local users
- Singapore — the Remote Gambling Act 2014 restricts the vast 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 commencing trading on any prediction market platform, confirm the following: (1) Does your location permit the platform to operate legally? (2) What tax implications arise from your gains? (3) What safeguards protect your funds if the operator becomes insolvent? For comprehensive taxation advice, consult our prediction market tax guide.
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