UK consumers use US prediction sites as FCA weighs retail ban lift

A government source, speaking to The Times on Friday, described the FCA's seven-year ban on retail prediction markets the way someone describes a policy they already know has failed: "It's like most prohibitions — they are largely ineffective."

That framing matters. It did not come from a platform lobbying for access. It came from inside government, and it named the mechanism precisely. When regulators designed to prevent consumer harm instead push consumers toward operators with no regulatory standards at all, the harm function has inverted. The FCA's own perimeter report acknowledges the category — it calls them "prediction market products" — while maintaining that financial versions remain binary options subject to the permanent retail ban instituted in 2019.

The ban was built on a real concern. Binary options had a documented history of heavy retail losses and traders who did not understand what they were buying. The FCA's position in 2019 was defensible. What has changed is not the product's risk profile but the counterfactual. UK consumers are using Kalshi and Polymarket now, from UK IP addresses, without FCA oversight of those transactions. The industry has been showing the FCA this data directly, and the FCA has been listening — which is why these discussions are happening at all.

The structure of any potential liberalisation is worth examining carefully, because it has two separate components that are easy to collapse into one. A platform wanting to offer financial prediction markets to UK retail customers needs the FCA to lift or carve out the binary options ban. A platform wanting to offer political event contracts — US midterm outcomes, UK general election seats — needs a gambling licence from the Gambling Commission. These are different regulators, different legal frameworks, different timelines. A company that secures one has not secured the other. The reporting on "FCA discussions" occasionally slides past this distinction, which is where mispricing happens.

The consensus read is that FCA movement is likely and licensing will follow. The consensus may be right. But the dual-regulator requirement is not a formality. Platforms that have navigated one framework and assumed the other would be analogous have found the assumption expensive. The Gambling Commission's standards on advertising, affordability checks, and AML compliance are operationally different from what the CFTC or even the FCA require for financial instruments. A US-native platform entering this market is not porting an existing compliance stack — it is building a second one.

The stronger signal is the government source's language. Officials do not describe active policy as largely ineffective unless they are preparing to change it. The FCA declined to comment and pointed to its perimeter report, which is the standard response when a review is live and a conclusion has not been reached. That combination — internal candour, external silence — is consistent with a regulator that has made a tentative decision and has not yet resolved the implementation sequence.