The U.K.’s financial regulator is considering whether to loosen restrictions on prediction markets aimed at retail investors, as British consumers increasingly use overseas platforms such as Kalshi and Polymarket, The Times reported.

The Financial Conduct Authority (FCA) has reportedly discussed the issue with trading platforms, although it has not publicly indicated that it plans to remove the existing restriction.

Prediction markets allow participants to trade contracts based on whether a future event will happen. The products can cover a wide range of subjects, including economic data, weather conditions and sporting events.

Under the FCA’s current rules, contracts linked to financial outcomes and certain weather events are treated as binary options. The regulator has prohibited firms from selling binary options to retail customers in Britain since 2019.

The FCA is now weighing whether that approach remains appropriate as U.K. consumers increasingly find ways to access prediction markets operated outside the country.

For the moment, the regulator continues to defend the ban. Its latest perimeter report said the restriction remains justified because these contracts are speculative and could expose consumers to harm.

At the same time, the FCA suggested that further work could examine consumer access to such products or provide greater clarity over where prediction markets fall within the regulatory framework.

Industry participants have been calling for a change in policy. According to The Times, representatives have presented the regulator with evidence that millions of people in Britain are already using offshore prediction platforms.

Some consumers reportedly use virtual private networks to bypass geographic restrictions. Those users may not receive the same protections available through regulated U.K. financial services.

The debate follows an FCA discussion paper examining retail investment rules. The paper noted that some prediction products could potentially be covered by the existing binary-options ban.

It also raised a broader regulatory question: whether speculative products should be governed according to the risks they create rather than simply the category under which they are classified.

Prediction Markets Expand

The regulatory review comes as prediction markets attract rapidly growing trading activity and interest from major financial companies.

Bernstein estimates that global prediction-market volume could reach $240 billion in 2026, compared with $51 billion in 2025, according to figures cited by The Times.

Kalshi and Polymarket have also reached valuations of approximately $22 billion and $21 billion, respectively.

The industry is attracting established companies beyond the specialist prediction-market sector. Coinbase, Robinhood and DraftKings have all introduced their own prediction products.

A company seeking to offer a comprehensive prediction-market platform in Britain would have to navigate two separate regulatory systems.

Financial event contracts would need to comply with the FCA’s rules, while markets covering sports and politics would fall under the Gambling Commission. Platforms offering those products would therefore need the appropriate gambling license, The Times reported.

The FCA did not immediately respond to CoinDesk’s request for comment.