Britain's Financial Conduct Authority has reportedly held discussions with trading platforms about potentially reopening financial prediction markets to retail investors, according to multiple reports. The regulator's reconsideration comes as British users aren't waiting for permission - they're already trading on US-based platforms like Kalshi and Polymarket through virtual private networks. The FCA has announced no policy reversal or rulemaking timetable as of September 7, 2026, with its public position remaining unchanged, but the discussions represent a meaningful shift in the regulator's stance toward instruments it once deemed too risky for everyday investors.
Combined monthly transaction volumes on Kalshi and Polymarket surged from under $5 billion in September 2025 to roughly $24 billion by April 2026, representing nearly a 5x increase in seven months. A significant portion of this activity is coming from users in jurisdictions where these platforms technically aren't supposed to be accessible, creating a two-tier system where savvy traders access global markets while less technically inclined users are limited to domestic alternatives. The FCA banned retail binary options in 2019, and many financial prediction market contracts fall squarely under that prohibition, with the regulator viewing these instruments as consistently leaving retail traders worse off.
The FCA permanently prohibited firms from selling binary options to retail consumers in April 2019, maintaining that these contracts resemble gambling, carry high risk of losses and are difficult for consumers to value accurately. The regulator continues to classify prediction contracts linked to financial and certain climate events as binary options, with sports, political and other non-financial contracts falling under the Gambling Commission's authority. The Gambling Commission warned in February that many current prediction platforms would likely meet the legal definition of a betting intermediary, while the UKGC signaled in February 2026 that commercial prediction markets dealing in non-financial events may need a betting intermediary license.
Licensed platforms are already emerging to fill the gap, with Versus launching a UK-facing offering that operates within the existing licensing framework. Meanwhile, the bigger US platforms remain blocked for British users through official channels, creating a regulatory gap. Kalshi holds a designation as a regulated exchange with the US Commodity Futures Trading Commission and has expanded into contracts covering economic data releases, Federal Reserve decisions, and other macro events. Polymarket operates on the Polygon blockchain, giving it a crypto-native infrastructure that makes transactions transparent and settlement automatic, though these platforms remain technically accessible only through VPNs. Platforms seeking to offer a broad range of contracts in the UK would still face dual regulatory hurdles: FCA approval for financial contracts and Gambling Commission licensing for sports and political markets.
