In this guide
Key takeaway: Regulatory frameworks for prediction markets diverge substantially across regions. The United States has adopted a CFTC-supervised model, the European Union classifies them as financial instruments under MiCA, whilst numerous countries throughout Asia enforce comprehensive prohibitions. Checking your jurisdiction's specific requirements is critical before participating in any trades.
The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Once occupying murky legal territory, the sector now features increasingly defined rules with distinct regional winners and losers. This resource outlines the worldwide regulatory landscape as it stands in mid-2026.
United States: The CFTC Era
Since its 2023 enforcement actions, the Commodity Futures Trading Commission (CFTC) has served as America's principal regulatory 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 unregistered operations. Afterwards, the platform implemented geographic restrictions preventing American users from direct participation
- Legislative momentum — various proposals advanced during 2025-2026 aimed at broadening the permissible scope of prediction markets beyond election-related subjects
European Union: MiCA Framework
The Markets in Crypto-Assets (MiCA) regulation achieved full implementation in December 2024, establishing the EU's regulatory structure. Prediction markets employing cryptographic tokens fall under crypto-asset services classification, necessitating:
- Registration as a Crypto-Asset Service Provider (CASP)
- Adherence to investor safeguards, anti-money laundering protocols, identity verification, and reserve requirements
- Technical documentation for any token designated as an asset-referenced token
To date, no leading prediction market has secured complete MiCA authorisation, though several maintain active applications in France and Germany.
United Kingdom
The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their characteristics. Platforms categorised as gambling operate under the UK Gambling Commission's remit; those categorised as financial derivatives fall within FCA jurisdiction. Betfair's event-based offerings hold a gambling licence, whilst emerging blockchain-based platforms navigate an ambiguous regulatory environment.
Asia-Pacific
- Japan — prediction markets remain prohibited through gambling statutes (Penal Code Sections 185-187), with limited exemptions reserved for state-sanctioned lottery schemes
- South Korea — likewise prohibited under the National Sports Promotion Act and Criminal Act provisions
- Australia — subject to state-based gambling rules. The Interactive Gambling Act 2001 (modified 2017) prevents foreign platforms from operating within the country
- Singapore — the Remote Gambling Act 2014 restricts the vast majority of digital 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 through a prediction market, confirm three essential points: (1) Does your location permit the platform's operations? (2) Which tax implications apply to your earnings? (3) What safeguards protect your capital if the operator becomes insolvent? Consult our prediction market tax guide for comprehensive information on financial obligations.
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