Bernstein sees prediction market volume reaching $240bn this year

Bernstein's volume projection — $51 billion in trading last year, $240 billion forecast for this year — is the number that explains why the FCA is now doing something it has not done since 2019: talking to the platforms it banned.

The conversations are informal, the FCA's public position unchanged. The regulator's latest perimeter report still describes binary options as too speculative for retail investors, still cites consumer harm as the operative concern. But the gap between what the FCA says and what British consumers are doing has grown wide enough that the policy has become, in practical terms, a traffic direction sign on an open motorway. Kalshi and Polymarket are valued at $22 billion and $21 billion respectively. Millions of British users are reaching them anyway, some through VPNs, which means they are outside UK consumer protections entirely. The FCA's ban did not stop access. It stopped protection.

The distinction matters because it changes the regulatory calculus entirely. A ban that keeps retail investors away from a product is a consumer protection instrument. A ban that routes retail investors through offshore platforms with no UK recourse is a consumer harm instrument. The FCA's own discussion paper on retail investment rules acknowledged the tension, asking whether speculative products should be regulated by risk profile rather than product label. That is not a question regulators ask when they are satisfied with the current answer.

What makes the FCA's position harder than the US debate is the two-door problem. Any platform that wants to operate broadly in the UK needs FCA permission for financial event contracts and a Gambling Commission licence for sports and political markets. That is two separate regulatory frameworks, two approval processes, two sets of compliance infrastructure. The US fight is about federal versus state authority. The UK fight is about which of two domestic regulators moves first, and whether either will. Coinbase, Robinhood, and DraftKings have already moved into prediction products in the US market. The longer the dual-regulator requirement sits unresolved, the more the UK market consolidates offshore.

I have watched regulators in similar positions before — where the stated rationale for a restriction has been overtaken by the behaviour it was meant to prevent. The usual outcome is not a reversal. It is a consultation, a discussion paper, a framework review, and then, eighteen months later, a quietly redrawn perimeter. The FCA's own language — "further work on access or clarification of the regulatory boundary" — is exactly the phrasing that precedes a drawn-out process rather than a swift decision.

The consensus reading is that the FCA is close to a shift. I don't think that's where this lands in the near term. The dual-regulator structure is not an administrative inconvenience — it is a structural constraint that would require both the FCA and the Gambling Commission to move in coordination, and there is no public indication the Gambling Commission has been pulled into these conversations at all. The FCA can talk to platforms about financial contracts. It cannot resolve the licensing gap on its own. That gap is where the delay lives.