The UK's Financial Conduct Authority is 'engaging' with prediction market platforms as operators including Kalshi and Polymarket explore a potential UK entry, the regulator's executive director for markets Simon Walls said at the FCA's annual public meeting in Edinburgh on October 6, 2026. 'We are engaging, we are interested in their plans for the UK,' Walls said in response to a question from Financial News, according to the publication's report.
Walls said the FCA has held a number of discussions with market participants as it weighs whether to relax rules that currently ban so-called binary options for retail investors. No event-driven trading platforms have yet secured authorisation to operate in the UK, and financial market contracts listed on such platforms would currently be barred for retail investors under rules introduced around seven years ago that outlawed binary options trading, Financial News reported.
The context is stark: the FCA banned binary options for retail because the harm was 'so acute,' Walls said, noting the high percentage of people who lost money. At the same time, he said 'it's not the FCA's instinct to ban things,' and described binary options as 'a completely legitimate and established part of institutional markets.' Walls also warned that prediction market odds on events like the collapse of lenders can be thin and illiquid, which creates a danger that people can move the price and manipulate markets, in contrast to large, liquid markets such as credit default swaps.
Financial News previously revealed that Kalshi, the New York-headquartered exchange, has established a UK subsidiary, while Polymarket has spoken with UK lobbyists about its communications strategy. The Times reported in September that the regulator could roll back the binary options ban after discussions with trading companies, according to the Financial News report. Walls framed prediction markets as familiar ground for Britain: '[Prediction markets] are not novel in structure, not brand new to the UK; we have had betting exchanges which are functionally equivalent since 2000 or slightly before,' he told Financial News.
The regulatory question matters because the bulk of prediction market revenue is tied to sports: Financial News reported that the vast majority of revenue Kalshi, Polymarket and their peers make relates to sports events, and a number of platforms list markets on the health of UK banks including HSBC and Lloyds. Walls said the FCA would publish the findings of an engagement paper by the end of the year examining whether its approach to prediction markets is 'coherent' with its approach to other areas, such as cryptoassets.
Analysis: the UK is the missing piece in the prediction market land grab. In the US, the CFTC is pushing rules to classify event contracts as swaps under federal jurisdiction, while states sue; in Europe, the Czech Republic has just ordered ISPs to block Kalshi after already blocking Polymarket. A UK opening would give Kalshi and Polymarket a third major front, and the FCA's framing suggests it would come through the binary options door, not the gambling door. That matters for the agent-trading economy too: UK authorisation would eventually extend event-contract liquidity to the world's largest wholesale financial market, where the FCA's retail protections are thinnest for professional counterparties. The engagement paper due by year end is the document to watch; if it finds the current stance 'incoherent,' a consultation and rule change could follow within 2027.