In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-supervised approach, the European Union classifies them as financial instruments under MiCA, whilst numerous jurisdictions in Asia enforce comprehensive prohibitions. Checking your jurisdiction's specific requirements before participating is critical.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Previously occupying murky legal territory, the sector now features increasingly defined rules with distinct regional winners and losers. This overview charts 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 the United States. 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 after operating without proper authorisation. American users have subsequently been restricted from accessing the platform directly
- Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden 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 governing structure. Platforms offering prediction markets through cryptographic tokens fall under crypto-asset service regulations, necessitating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification, and financial reserve rules
- Technical documentation for tokens designated as asset-referenced instruments
To date, no leading prediction market has secured complete MiCA authorisation, though several have submitted applications with regulators in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their characteristics. Venues classified as gaming activities operate under the UK Gambling Commission's oversight; those structured as financial derivatives fall under FCA jurisdiction. Betfair's outcome markets function under a gaming permit, whilst emerging blockchain-based competitors navigate an ambiguous regulatory environment.
Asia-Pacific
- Japan — prediction markets remain effectively prohibited under gaming statutes (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — likewise forbidden under the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gaming rules. The Interactive Gambling Act 2001 (as revised in 2017) prevents overseas platforms from operating within Australian borders
- Singapore — the Remote Gambling Act 2014 restricts the vast 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 three essential points: (1) Does your location permit the platform's operations? (2) What fiscal consequences apply to your returns? (3) What safeguards protect your funds should the operator encounter difficulties? For comprehensive tax information, consult our prediction market tax guide.
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