Key takeaway: Regulatory treatment of prediction markets diverges significantly across borders. The United States has adopted a CFTC-supervised approach, the European Union classifies them under MiCA as financial instruments, whilst numerous jurisdictions across Asia enforce comprehensive prohibitions. Knowing your jurisdiction's stance is critical before placing any trades.
The prediction market regulation landscape has undergone substantial transformation over the last twenty-four months. Once inhabiting murky legal territory, the sector now features increasingly codified rules with distinct regional winners and losers. This article surveys the international regulatory environment as it stands in mid-2026.
United States: The CFTC Era
Since its 2023 enforcement initiatives, the Commodity Futures Trading Commission (CFTC) has emerged as America's lead regulatory body. Notable milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), legitimately providing event-based contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 following unlicensed operations. Consequently, American users face geographic restrictions preventing direct platform entry
- Legislative momentum — lawmakers tabled numerous proposals during 2025-2026 seeking to broaden permissible prediction market activities beyond election-centred offerings
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation became fully operational in December 2024, establishing the EU's governance model. Prediction markets employing cryptocurrency tokens fall under crypto-asset services classification, necessitating:
- Registration as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification, and reserve requirements
- Technical documentation for tokens classified as asset-referenced instruments
To date, no leading prediction market has secured complete MiCA authorisation, though several maintain active applications with regulators in France and Germany.
United Kingdom
The UK's Financial Conduct Authority (FCA) evaluates prediction markets individually according to their characteristics. Platforms designated as gaming operations come under the UK Gambling Commission's purview; those structured as financial derivatives fall to FCA oversight. Betfair's event-based offerings function under a gaming licence, whereas emerging blockchain-based competitors navigate an ambiguous regulatory landscape.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited by gambling statutes (Penal Code Sections 185-187), save for state-sanctioned lottery schemes
- South Korea — likewise proscribed under the National Sports Promotion Act and Criminal Act provisions
- Australia — falls under state-based gaming rules. The Interactive Gambling Act 2001 (as revised in 2017) bars overseas operators from serving Australian users
- 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
Ahead of committing capital to any prediction market, confirm three critical points: (1) Does your jurisdiction permit the platform's operation? (2) Which tax implications attach to your profits? (3) What safeguards protect your funds should the operator encounter insolvency? Our prediction market tax guide provides comprehensive detail on this subject.
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