Prediction Market Regulation in 2026: What's Legal Where?

The prediction market regulation environment has undergone substantial transformation over the last twenty-four months. Previously occupying an ambiguous legal space, the sector now exhibits clearly defined regulatory pathways with distinct regional winners and losers. This overview documents the international regulatory picture as it stands in mid-2026.

United States: The CFTC Era

Since its enforcement initiatives in 2023, the Commodity Futures Trading Commission (CFTC) has emerged as the dominant US regulatory authority. 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 operations. Subsequently, American participants have been restricted from accessing the platform directly
• Legislative momentum — numerous proposals advanced during 2025-2026 seeking to broaden the permissible scope of prediction market activities beyond election-related forecasts

European Union: MiCA Framework

The Markets in Crypto-Assets (MiCA) regulation, operational throughout the EU since December 2024, establishes the governing structure. Prediction markets employing cryptocurrency tokens fall within the crypto-asset services classification and necessitate:

• Registration as an authorized Crypto-Asset Service Provider (CASP)
• Adherence to investor safeguards, anti-money laundering protocols, identity verification procedures, and reserve requirements
• Technical documentation for any token designated as an asset-referenced token

To date, no prominent prediction market has secured complete MiCA authorization, though several entities maintain pending applications in France and Germany.

United Kingdom

The UK Financial Conduct Authority (FCA) evaluates prediction markets individually based on their operational characteristics. Platforms classified as gambling activities operate under the UK Gambling Commission's oversight; those structured as financial derivative products fall under FCA jurisdiction. Betfair manages its event prediction offerings via a gambling license, whereas emerging blockchain-based platforms navigate an ambiguous regulatory environment.

Asia-Pacific

• Japan — prediction markets face an effective prohibition under gambling statutes (Penal Code Sections 185-187), with limited carve-outs for state-sanctioned lottery schemes
• South Korea — subject to comparable restrictions under the National Sports Promotion Act and Criminal Act provisions
• Australia — falls under state-based gambling oversight mechanisms. The Interactive Gambling Act 2001 (as revised in 2017) blocks access to offshore platforms
• Singapore — the Remote Gambling Act 2014 restricts the vast majority of web-based prediction market operations

Country-by-Country Status Table

What This Means for Traders

Prior to initiating any position on a prediction market platform, confirm the following: (1) Does the operator hold proper licensing within your region? (2) What income tax rules govern your earnings? (3) What safeguards protect your capital in case of platform insolvency? For comprehensive tax information, consult our prediction market tax guide.

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