In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-regulated approach, the European Union classifies them as financial instruments under MiCA, whilst numerous Asian jurisdictions enforce comprehensive prohibitions. Verifying compliance with your regional rules before participating is critical.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying ambiguous legal territory, the sector now features increasingly defined rules with distinct regional winners and losers. This overview surveys the international regulatory landscape 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 the principal US authority. 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 unauthorised operation. Consequently, direct access for US-based users has been restricted through geographical blocking
- Legislative momentum — lawmakers have advanced several proposals during 2025-2026 seeking to broaden permissible prediction market activities beyond election-focused categories
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation became fully operational in December 2024, establishing the EU's governing structure. Prediction markets employing cryptographic tokens fall under crypto-asset service rules, mandating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money-laundering protocols, identity verification, and prudential standards
- Technical documentation for tokens designated 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 Financial Conduct Authority (FCA) evaluates prediction markets individually based on their operational characteristics. Platforms classified as gaming activities operate under the UK Gambling Commission's remit; those structured as financial derivatives fall within FCA jurisdiction. Betfair's event offerings function under a gaming licence, whereas emerging blockchain-based competitors navigate considerable regulatory uncertainty.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited under gambling statutes (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — comparable restrictions apply via the National Sports Promotion Act and Criminal Act provisions
- Australia — falls under state-administered gaming rules. The Interactive Gambling Act 2001 (as amended in 2017) blocks offshore platforms from servicing Australian users
- Singapore — the Remote Gambling Act 2014 curtails most 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
Before committing capital to any prediction market, confirm three essential points: (1) Does your jurisdiction permit the platform's operations? (2) Which tax implications apply to your returns? (3) What safeguards protect your funds in case of platform insolvency? Our comprehensive tax resource addresses these considerations in depth.
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