Polymarket, Kalshi and the UK: Are Prediction Markets Gambling?

Polymarket and Kalshi are looking at the UK. On 6 October, Financial News reported that the Financial Conduct Authority is engaging with both companies as they consider entering the market.

Neither platform is currently open to UK users. More importantly, Britain does not regulate every prediction market in the same way.

A market on whether a political party wins an election can fall under gambling regulation. If the prediction is about a financial event, such as an interest-rate decision or a stock-market level, it can fall under the FCA instead. The FCA currently treats products like these as binary options, which firms are banned from selling to ordinary UK consumers.

What a prediction market actually sells

The language looks more like trading than betting. A market asks a question with a defined outcome. Will a candidate win? Will inflation finish above a certain level? Will a company hit a target by a certain date?

On markets such as Polymarket, users buy YES or NO contracts and can sell their position before the event is settled. Prices move as people trade, so a contract priced at 63 cents is presented as roughly a 63% market probability. The Gambling Commission's own explanation compares this kind of model with a betting exchange.

That comparison matters more in Britain than the trading-style interface. Betting exchanges already match customers against other customers, so calling the product a market or a contract does not decide how it is regulated.

The Gambling Commission already has an answer for a lot of these markets

The Gambling Commission set out its position in February. Its prediction-market guidance says that, depending on the exact business model, the current products appearing in the US would seem to fit the UK definition of a betting intermediary. The Commission's own comparison is with a betting exchange.

There is already a licence for that. A remote betting intermediary operating licence covers a business that brings two or more betting parties together online without taking liability for the bets itself. The Commission also says that a prediction-market operator launching in Great Britain could not simply classify the whole business as non-gambling if parts of it fall within gambling law.

For sports, politics and other non-financial events, the position is relatively easy to understand. If the product meets the legal definition of betting, the fact that customers call themselves traders does not remove it from gambling regulation.

Financial markets bring the FCA into it

The FCA's 2026 perimeter report gets more specific. It says prediction markets linked to non-financial events such as sport or politics fall under the Gambling Commission. Contracts based on financial events, and some climatic events, fall within the FCA's perimeter.

The FCA's current view is that the financial prediction-market products it has seen are binary options. That is a problem for a retail launch because the FCA permanently banned the sale, marketing and distribution of binary options to retail consumers in 2019 and the ban remains in force.

Take two hypothetical markets:

• Will Labour win the next general election?
• Will the FTSE 100 finish above a stated level on a stated date?

The first sits naturally on the gambling side of the line. The second can move into financial regulation.

A platform carrying both kinds of market may therefore need to deal with two different regulatory systems. The FCA and Gambling Commission material separates products by what the contract is actually about, rather than treating every market on one app as the same thing.

Polymarket wants regulators to see an exchange, not a bookmaker

Polymarket has been arguing for the financial interpretation. In September, the Financial Times reported that the company had been lobbying UK and European regulators to treat prediction markets as financial products rather than gambling.

Its chief legal officer Neal Kumar made the case more directly in an FT letter published on 5 October. Polymarket's position is that prediction markets are exchanges used for price discovery. Users trade against each other, prices change with new information and the platform is not simply a house taking the other side of the bet.

There is substance to the exchange comparison. In the US, the Commodity Futures Trading Commission's list of designated contract markets includes Kalshi and QCX LLC, which operates there under the name Polymarket US. Britain does not have to use the same classification. Betfair has been matching customers against one another for years, so UK gambling law already knows what a peer-to-peer betting market looks like. The shape of the trading screen is only part of the legal question.

Britain already has an awkward border with spread betting

This boundary existed before prediction markets arrived. The Gambling Commission's February guidance notes that spread betting sits outside its normal remit and is regulated by the FCA.

The FCA's 2026 perimeter report says financial spread betting fits within financial regulation, while sports spread betting does not fit neatly into the same framework. The FCA has suggested the sports version may be better served by rules designed around gambling risks.

Football Index showed how confusing the language can get

Football Index used investment language too. Customers bought what it called "shares" in footballers and received returns linked to their performance, although the product was licensed as gambling. The business collapsed in 2021.

The government review that followed examined both the Gambling Commission and the FCA. Its published findings said the Commission should have scrutinised the novel product earlier, including the language used to describe it.

Prediction markets are not Football Index. The useful lesson is narrower: words such as share, market and investment do not decide which regulator has jurisdiction. The Gambling Commission and FCA now have a formal framework for sharing information on overlapping issues.

The UK picture has moved quickly

Companies House shows KALSHI UK LIMITED with £100 of share capital and a business-support-services SIC code. Incorporation is not regulatory approval and does not establish a launch date, but it gives Kalshi a UK corporate presence.

Polymarket has taken a different route, lobbying regulators over how prediction markets should be classified. Financial News reported that the FCA is engaging with both companies and that neither has secured FCA authorisation to operate in the UK.

What about a market on a bank failing?

One current Polymarket market asks which banks will fail by the end of 2026. The list includes HSBC and Lloyds. The Guardian reported more than $77,000 in trading volume, while iGaming Times later reported $78,911 by 5 October and set out the market's resolution criteria.

The volume is trivial beside the banking system. Its significance here is regulatory: it is a binary market on an explicitly financial event. The Guardian also reported concerns from MPs and market experts about manipulation and market integrity.

The example shows why classification gets awkward. Whether Arsenal wins a match is easy to recognise as betting. A binary position on whether a major bank enters resolution has plainly financial subject matter.

The FCA's perimeter report says financial-event prediction contracts can fall under financial regulation. Its current position also says the financial products it has seen are binary options that retail customers cannot be sold. Markets on sport, elections, inflation, banks and other events can now sit beside one another on the same platform, making the old regulatory boundary much harder to ignore.

Can you use Polymarket or Kalshi from the UK now?

Their own rules currently say no. GamRight reviewed Polymarket's geographic-restrictions page and Kalshi's current member agreement on 7 October 2026. Polymarket lists GB / United Kingdom among its blocked countries and says using a VPN or similar tool to bypass those restrictions is prohibited. Kalshi also lists the United Kingdom as a restricted jurisdiction.

We have not linked directly to either service because neither currently has a licensed UK retail offering.

The Gambling Commission's position is also clear for operators. Prediction-market businesses that are not licensed in Great Britain should not target or transact with consumers here where their activities fall within the Commission's remit.

Anyone presented with a gambling business claiming to be licensed in Great Britain can use GamRight's guide to checking the Gambling Commission public register to verify the operator and domain.

What happens next

The FCA has not announced a general rule change allowing retail customers to buy prediction-market binary options. Its published position still says the financial prediction-market products it has seen fall under the retail binary-options ban, while the regulator has said it will consider whether to do more work on access to these products or clarify the perimeter. Financial News reported this week that an FCA engagement paper is expected by the end of 2026.

On the gambling side, the Commission has already left the door open to a licensed model. Its February statement did not reject prediction markets as a category. It said their current core features look like a betting exchange and that the betting-intermediary licence already exists for businesses of that kind.

For now, a YES or NO market on a sporting or political event can fall into British gambling regulation. A similar-looking contract on a financial event can move into FCA territory, where retail binary options remain banned.

Polymarket and Kalshi are exploring a UK market that already has rules for both sides of the model. The unresolved question is what happens if either platform wants to offer both kinds of market here.