In this guide
Key takeaway: Regulatory frameworks for prediction markets diverge significantly 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. Confirming compliance with your region's requirements is critical before engaging in trading activity.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once positioned in legal ambiguity, the sector now features clearly defined rules with distinct regional winners and losers. This article surveys the current global 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 served as the principal regulatory authority across America. Notable regulatory 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 unregistered operations. Subsequently, direct platform access has been restricted for US-based traders
- Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden the permissible scope of prediction markets beyond election-related contracts
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation became fully operational in December 2024, establishing the EU's foundational structure. Prediction markets employing cryptocurrency tokens fall under crypto-asset services classification, mandating:
- Registration as an authorised Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, know-your-customer verification, and prudential reserves
- Technical documentation for tokens designated as asset-referenced instruments
To date, no prominent prediction market platform has secured complete MiCA authorisation, though several maintain active licensing applications across France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction market platforms individually based on their operational structure. Venues categorised as gambling operations come under the UK Gambling Commission's remit; those structured as financial derivatives fall within FCA jurisdiction. Betfair's event-based offerings operate under gambling authorisation, whereas emerging blockchain-based platforms encounter regulatory uncertainty.
Asia-Pacific
- Japan — prediction markets remain prohibited under gambling statutes (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
- South Korea — prohibition applies through the National Sports Promotion Act and Criminal Code provisions
- Australia — subject to state-based gambling rules. The Interactive Gambling Act 2001 (as amended in 2017) prevents offshore platforms from serving local customers
- Singapore — the Remote Gambling Act 2014 restricts the vast majority of internet-based prediction market operations
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 initiating any trade on a prediction market, confirm three essential points: (1) Does your jurisdiction authorise the platform's operations? (2) Which tax rules govern your gains? (3) What safeguards protect your funds in case of platform insolvency? Consult our prediction market tax guide for comprehensive information.
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