The UK Gambling Commission is the statutory regulator for gambling in Great Britain, established under the Gambling Act 2005. Its mandate is to regulate gambling “in the public interest” by keeping crime out of gambling, ensuring gambling is conducted fairly and openly, and protecting children and vulnerable people.
The UKGC has licensing jurisdiction over operators who provide gambling facilities to UK consumers. Under the Gambling (Licensing and Advertising) Act 2014, any operator advertising to UK consumers must hold a UKGC operating licence, regardless of where the operator is physically based. This is why offshore gambling sites serving UK customers are within UKGC enforcement reach even if they are incorporated in Gibraltar or Malta.
Critically, the UKGC’s jurisdiction is defined by the scope of the Gambling Act 2005 itself. Activities that do not fall within the statutory definition of gambling are simply outside UKGC scope — no licence is required, no regulatory oversight applies.
The Gambling Act 2005 defines gambling as any of the following:
Financial services — trading in securities, derivatives, commodities, or currencies — are explicitly excluded from the Gambling Act 2005 by Section 10, which provides that activities regulated under the Financial Services and Markets Act 2000 (FSMA 2000) do not constitute gambling for the purposes of the Act.
Betting under Section 9 of the Gambling Act 2005 is defined as making or accepting a bet on the outcome of a race, competition, or other event; the likelihood of anything occurring or not occurring; or whether anything is true or not. This is a broad definition that could, on a surface reading, encompass prediction markets.
However, the application of betting law requires a bookmaker relationship — one party offering odds (the bookmaker) and another accepting them (the customer). In a prediction market, there is no bookmaker. Two traders agree on a price. The platform is a neutral exchange, not a counterparty. This structural difference is significant in the context of betting legislation, which is written around the bookmaker-customer relationship.
The core reasons prediction markets are not currently classified as gambling in the UK are:
None of this means UK law definitively considers prediction markets to be legal financial products. It means they are currently in an unregulated space that no UK authority has claimed jurisdiction over.
In the United States, the legal status of prediction markets has been resolved more clearly. Kalshi is a CFTC-regulated Designated Contract Market (DCM), placing event contracts in the same legal category as futures and options traded on CME Group. The CFTC’s position is that event contracts on genuinely economic or political outcomes are commodity derivatives — financial instruments — not gambling.
This US precedent is informative for the UK debate. If the world’s primary commodity derivatives regulator classifies prediction markets as financial products, it becomes harder to argue they are gambling products under any analytical framework.
The CFTC/Kalshi model is what many UK market participants hope to see replicated by the FCA — a clear regulatory framework that legitimises prediction markets as financial instruments, creates consumer protections, and allows the market to grow transparently. As of May 2026, no such framework exists in the UK.
The UK position on prediction markets is genuinely ambiguous. There are several unresolved questions:
The UKGC could potentially argue that certain prediction market structures constitute betting under the Gambling Act 2005, particularly for markets on sporting outcomes. The UKGC has not publicly taken this position, and doing so would be legally contested. The peer-to-peer exchange structure makes the bookmaker-customer framing of the betting definition difficult to apply.
Blockchain-based binary option contracts may eventually fall under FCA cryptoasset regulation. The FCA has been progressively expanding its cryptoasset regulatory perimeter. Binary options are specifically mentioned in the FCA’s list of regulated activities when offered by FCA-authorised firms. Decentralised prediction market contracts may be treated differently from centralised binary option products, but this is untested.
The UK government’s 2023 Gambling Act review did not address prediction markets. The white paper focused on consumer protection for traditional gambling products. Prediction markets did not receive a dedicated policy position. This is expected to be revisited as the market grows.
The current legal position has several practical implications for UK residents who trade on prediction markets:
There is no UK statute that prohibits UK residents from participating in prediction markets. The UKGC has not issued guidance stating that using platforms like PolyGram or Polymarket is unlawful. UK residents using these platforms are not in breach of any known UK regulation.
Because prediction markets are not UKGC-regulated, you have no access to the dispute resolution, responsible gambling tools, or consumer protection standards that apply to UKGC-licensed operators. If something goes wrong with your account, there is no UKGC complaints process. If the platform fails, there is no FSCS compensation scheme (which covers FCA-regulated investments up to £85,000).
HMRC has not exempted prediction market winnings from tax in the way that gambling winnings are exempt. The tax treatment depends on the frequency and nature of your activity. HMRC’s cryptoasset guidance (CRYPTO22100) applies to USDC transactions. Prediction market profits may constitute capital gains or trading income depending on circumstances. Obtain professional tax advice.
UK regulatory clarity on prediction markets is likely to arrive within the next few years, either through FCA cryptoasset regulation or targeted UKGC or Treasury action. The direction of travel globally (CFTC classification in the US) suggests formal recognition as financial instruments is more probable than a gambling classification, but this is uncertain. Monitor regulatory developments if you are trading at significant scale.
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