UK Faces Prediction Market Regulation Challenges Amid US Boom

The UK is facing challenges in regulating prediction markets like Polymarket, which are gaining investor interest, as UK users reportedly circumvent existing gambling laws. This comes as these platforms have seen significant activity in the US, leveraging regulatory distinctions from traditional sports betting.

What Happened

Prediction markets such as Polymarket are experiencing increased interest, reportedly fueled by major events like the World Cup and UK byelections. According to The Guardian, UK users are able to bypass existing regulations on these platforms, as evidenced by Dode Dahroug’s use of Polymarket data during a World Cup match to gain advance insight into game outcomes, exploiting a time lag in live TV broadcasts.

The Guardian also reported successfully setting up an account with Polymarket from the UK using a VPN and depositing cryptocurrency to place wagers. Polymarket stated that using a VPN from the UK violates its terms of service and that it is enhancing compliance tools, including “on-chain monitoring, third-party compliance tools, and internal review processes.”

Key Details

• Polymarket and Kalshi have gained popularity in the US by convincing American regulators they are financial trading products, allowing them to operate in states where sports betting remains restricted, according to The Guardian. The Commodities and Future Trading Commission (CFTC) regulates these markets.
• California and Texas, with a combined economy estimated at $7tn, reportedly lack established regulatory regimes for sports betting, providing a significant operational area for CFTC-regulated prediction markets (The Guardian).
• During the World Cup, registered prediction markets globally reportedly attracted trading volumes of at least $45bn, though analysts at Eilers & Krejcik Gaming estimate the actual World Cup stakes in the US were closer to $5.6bn (£4bn) per month, according to The Guardian. This figure is roughly double the £2bn reportedly wagered via sportsbooks monthly in the UK, an economy approximately one-eighth the size of the US.
• In the UK, the Gambling Commission has stated that prediction markets require a gambling license for sports trading, while the Financial Conduct Authority prohibits such betting under its ban on “binary option” products (The Guardian).
• James Bradley of Fairer Finance expressed concern over UK customers betting on these sites, observing that bypassing geo-restrictions via VPNs appears to be easily achievable despite warnings, as reported by The Guardian.
• Trading volumes on UK political events, such as byelections in Clacton and Gorton and Denton, have reportedly reached millions of dollars, suggesting significant UK participation (The Guardian).
• Smaller UK operators are reportedly adapting to this trend, with “easyBets” launching as a dedicated prediction market and Smarkets revamping its interface to resemble an American-style prediction market, according to The Guardian.

Why It Matters

The reported ability of UK users to bypass existing regulations on prediction markets like Polymarket highlights a potential gap in regulatory oversight within the British market. The US experience, where these platforms are regulated as financial products allowing them to operate in states without legal sports betting, underscores a regulatory distinction that impacts market accessibility and growth. This situation raises questions about consistent regulatory frameworks across different jurisdictions and the potential for regulatory arbitrage.

The reported high trading volumes on UK political events suggest a significant, potentially unregulated, market for prediction-based wagers. This could introduce risks regarding market integrity and consumer protection, especially considering concerns raised by Fairer Finance regarding the potential for such markets to influence political outcomes and the precedent of past betting scandals in the UK. The contrasting views on the likelihood of prediction markets gaining mainstream traction in the UK, as expressed by James Bradley and Alun Bowden, indicate an evolving landscape for regulated betting and financial products.

What’s Next

Polymarket states it is strengthening its tools for compliance, including “on-chain monitoring, third-party compliance tools, and internal review processes” (The Guardian). James Bradley of Fairer Finance believes it is only a matter of time before prediction markets become mainstream in Britain, while Alun Bowden of Eilers & Krejcik Gaming remains skeptical, arguing the fundamental consumer need met in the US does not exist in the UK (The Guardian).

Originally reported by The Guardian·Published 26 Jul 2026, 13:00