In this guide
Key takeaway: Regulatory frameworks for prediction markets differ substantially across regions. The United States has adopted a CFTC-supervised model, 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 recent years. Once occupying murky legal territory, the sector is now crystallising into a structured ecosystem with distinct regional approaches. This article surveys the international regulatory picture as we move through 2026.
United States: The CFTC Era
Since its 2023 enforcement campaign, the Commodity Futures Trading Commission (CFTC) has emerged as America's lead oversight body. 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 operations. Subsequently, the platform has restricted access for US-based users
- Legislative momentum — lawmakers have tabled various proposals during 2025-2026 seeking to broaden the permissible scope of prediction market activity beyond election-related instruments
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation, operational throughout the EU from December 2024 onward, establishes the regulatory foundation. Platforms deploying crypto tokens for prediction markets face classification as crypto-asset services, necessitating:
- Registration as an authorised 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 instruments
To date, no prominent prediction market operator 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 on their specific characteristics. Operators categorised as gambling activities report to the UK Gambling Commission; those operating as financial derivatives come under FCA jurisdiction. Betfair's event-based offerings function under a gambling permit framework, whereas emerging blockchain-based competitors encounter regulatory ambiguity.
Asia-Pacific
- Japan — prediction markets remain prohibited under national gambling statutes (Penal Code Sections 185-187), with limited carve-outs reserved for state-sanctioned lottery schemes
- South Korea — subject to equivalent restrictions via the National Sports Promotion Act and Criminal Act provisions
- Australia — falls under state-administered gambling frameworks. The Interactive Gambling Act 2001 (revised 2017) prevents offshore operators from serving Australian customers
- Singapore — the Remote Gambling Act 2014 restricts online prediction market activities
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
When considering participation on any prediction market platform, confirm three essential points: (1) Does the operator hold appropriate licensing for your region? (2) What fiscal obligations arise from your earnings? (3) What safeguards protect your funds should the operator encounter difficulties? Our comprehensive tax resource covers these considerations in depth.
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