FCA Confirms Talks With Kalshi and Polymarket Over UK Entry
Financial Conduct Authority markets chief Simon Walls confirmed on October 6 that the UK regulator is in talks with prediction market operators including Kalshi and Polymarket about potential UK entry. The discussions come as the FCA weighs whether to ease the retail binary options ban that has been in force since April 2019. The platforms argue their products are not binary options or gambling, because they do not set odds, do not profit from customer losses, and match orders on a central limit order book. The UK's openness contrasts sharply with the enforcement actions taken by Czech, Belgian, French, German, Spanish, and Romanian regulators.
Simon Walls, the head of markets at the UK Financial Conduct Authority, confirmed on October 6, 2026 that the regulator is holding talks with prediction market operators, including Kalshi and Polymarket, about the conditions under which they might operate in the United Kingdom. The confirmation, reported by the Financial Times, is the clearest signal yet that the FCA is actively considering a regulated pathway for prediction markets in the UK rather than simply enforcing the existing prohibition. The talks come after the FCA spent much of 2026 reviewing whether the retail binary options ban, in force since April 2019, should continue to capture prediction market event contracts, or whether these products warrant a distinct regulatory treatment. For a UK audience, the FCA's willingness to engage is significant: it opens the possibility that Kalshi and Polymarket could become legally accessible to UK retail users for the first time, after seven years in which UK residents could only reach the platforms through VPNs.
The central regulatory obstacle is the binary options ban. The FCA prohibited the sale of binary options to retail consumers in April 2019 following widespread evidence of consumer losses and fraud in the binary options market. In its 2026 perimeter report, the FCA stated that the financial prediction-market products it examined were, in its assessment, binary options — and therefore remained subject to the prohibition. This is the crux of the definitional fight: if a prediction market event contract that pays out a fixed amount on a yes/no outcome is a binary option, it is banned for UK retail; if it is something else, a new regulatory treatment is possible. The platforms are arguing for the latter, and the FCA's decision to hold talks suggests it is at least willing to consider whether the 2019 ban, designed to stop a specific category of fraudulent product, should apply to CFTC-regulated event contracts traded on a transparent order book.
The platforms' argument against the gambling and binary-options classifications was articulated by Polymarket's chief legal officer Neal Kumar: prediction markets 'do not set any odds, we do not benefit from customer losses, traders can exit at any time, and orders are matched on a central limit order book by price and time priority.' The distinction Kumar draws is between a bookmaker model and an exchange model. A bookmaker (or a fixed-odds binary options seller) sets the price, takes the opposite side of the customer's position, and profits when the customer loses — a structure with an inherent conflict of interest that underpins both gambling regulation and the binary options ban. An exchange, by contrast, matches buyers and sellers against each other, takes a transaction fee regardless of who wins, and has no position in the outcome. If the FCA accepts that prediction markets operate on the exchange model rather than the bookmaker model, the rationale for applying the binary options ban weakens considerably, because the consumer-protection concern that motivated the 2019 ban — operators profiting from engineered customer losses — does not apply in the same way.
The UK's constructive engagement stands in sharp contrast to the rest of Europe. In the same period that the FCA confirmed talks, the Czech Republic blocked both platforms, joining Belgium, France, Germany, Spain, and Romania in treating prediction markets as unlicensed gambling subject to enforcement. The divergence reflects the UK's distinct regulatory architecture: the FCA is a financial-conduct regulator with authority over investment products, and it is approaching prediction markets as a financial-markets question. Most continental European actions have come from gambling regulators applying gambling law. The UK also has a separate gambling regulator — the Gambling Commission — and sports and political prediction markets could still face gambling licensing requirements even if the FCA creates a financial-markets pathway for economic and financial contracts. The likely UK outcome, if the talks progress, is a split treatment: financial and economic event contracts regulated by the FCA as a new product category, and sports and political contracts potentially still subject to Gambling Commission licensing. That would make the UK one of the first major jurisdictions to craft a bespoke regulatory framework for prediction markets rather than forcing them into either the gambling or the banned-binary-options box.
Operators mentioned in this article
Recent updates
Kalshi's Parlays Drive Back-to-Back $5B Days — and Hand Critics Their Strongest Argument
Kalshi traded a record $5.33 billion on November 7 and $5.36 billion on November 8, with multi-leg parlay-style 'combos' making up roughly 75% of both days' volume. Its 30-day volume topped $100 billion. But the parlay dominance cuts against the platform's legal defense: parlays are a quintessential sportsbook product, and the American Gaming Association has told the Second Circuit that parlays make up about two-thirds of Kalshi's volume and should be treated as sports bets. The implied house edge on 10-plus-leg combos is around 25%, undercutting the argument that these are neutral financial instruments rather than gambling.
Cruz Bill Would Require State or Tribal Approval for Sports Contracts — a Bipartisan Legislative Threat Emerges
Senator Ted Cruz, who chairs the Senate Commerce Committee, is preparing a bill that would bar federally regulated prediction markets from offering gambling-tied event contracts, including sports, unless a state or tribal government authorizes them. It would not ban the contracts nationwide but would require platforms to obtain approval jurisdiction by jurisdiction, resembling state-by-state sportsbook regulation. The proposal arrives as Democrats take control of both chambers after the midterms, creating a potential bipartisan reckoning: a Republican committee chair and a newly skeptical Democratic majority both eyeing restrictions on a sector that had relied on federal protection.
CFTC Tells Platforms to Stop Geofencing States — Directly Colliding With State Court Orders
The CFTC issued an interpretation on November 5 of its 'impartial access' core principle, telling regulated exchanges including Kalshi and Polymarket to drop state-by-state geographic blocks within 30 days or explain why they cannot. The demand collides head-on with existing state court orders that require the platforms to geofence: Washington ordered Kalshi to geofence in August, and Michigan ordered it to use licensed geolocation to block the state in September, with a $500,000 daily fine for violations. Chairman Michael Selig framed the interpretation as a uniformity requirement. The platforms are now caught between a federal demand to unblock states and state court orders to block them.