Key takeaway: Regulatory frameworks for prediction markets diverge 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. Traders must familiarise themselves with applicable local legislation before participating.
Over the last twenty-four months, the prediction market regulation environment has undergone substantial transformation. Previously occupying uncertain legal territory, the sector is now crystallising into a structured framework with distinct regional winners and losers. This article surveys the regulatory landscape globally as it stands in mid-2026.
United States: The CFTC Era
Since its pivotal enforcement actions in 2023, the Commodity Futures Trading Commission (CFTC) has emerged as the dominant regulatory authority in America. Notable regulatory milestones include:
- Kalshi — holds full CFTC registration as a designated contract market (DCM), permitting lawful distribution of event contracts to American participants
- Polymarket — reached a settlement with the CFTC in 2022 following unlicensed operation. Consequently, American participants cannot access the platform directly
- Legislative momentum — lawmakers have tabled numerous proposals during 2025-2026 seeking to broaden the permissible scope of prediction markets beyond election-focused instruments
European Union: MiCA Framework
Following its complete implementation in December 2024, the Markets in Crypto-Assets (MiCA) regulation establishes the EU's governing structure. Prediction markets utilising cryptocurrency tokens fall within the crypto-asset services category and must satisfy:
- Formal recognition as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification, and reserve requirements
- Technical documentation for tokens designated as asset-referenced instruments
To date, no leading prediction market has secured full 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 based on their characteristics. Platforms categorised as gambling activities operate under the UK Gambling Commission's remit; those structured as financial derivatives fall within FCA jurisdiction. Smarkets' event contracts operate under a gambling licence, whereas emerging blockchain-based platforms encounter regulatory ambiguity.
Asia-Pacific
- Japan — prediction markets face effective prohibition under gambling statutes (Penal Code Articles 185-187), with restricted exemptions for state-sanctioned lottery schemes
- South Korea — prohibited similarly under the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gambling regulation. The Interactive Gambling Act 2001 (updated 2017) prevents offshore platforms from servicing Australian users
- Singapore — the Remote Gambling Act 2014 restricts virtually all 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
When considering participation in any prediction market, you should confirm the following: (1) Does your jurisdiction permit the platform's operation? (2) What fiscal implications arise from your earnings? (3) What safeguards protect your capital should the operator encounter difficulties? Consult our prediction market tax guide for comprehensive tax information.
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