FCA Weighs Adjustments to 2019 Prediction Market Ban Amid VPN Usage Trends

The UK's Financial Conduct Authority has initiated discussions with trading platforms regarding potential revisions to its 2019 retail ban on financial prediction markets, products often classified similarly to binary options, while British consumers increasingly access overseas platforms such as Kalshi and Polymarket through VPN connections.

These talks occur as global trading volumes on such platforms continue to rise sharply, with Bernstein projections indicating $240 billion in trading volume for 2026, yet the regulator maintains its public position that the ban protects consumers from harm associated with speculative products.

Background on the 2019 Restrictions

The Financial Conduct Authority introduced the retail ban in 2019 after determining that financial prediction markets posed significant risks to individual investors due to their binary outcome structure and high speculative elements, measures that aligned with broader efforts to limit access to complex derivatives for non-professional participants, and the policy has remained in place without formal alteration since its implementation.

Observers note that the restriction applied specifically to retail access while institutional participation faced separate considerations, creating a framework where licensed entities could operate under strict conditions but everyday consumers encountered outright prohibitions on these instruments within the UK market.

Recent Developments in September 2026

During September 2026 the FCA began holding conversations with various trading platforms to explore whether adjustments or a full revisit of the ban might address evolving market dynamics, including the reality that many UK residents now route connections through virtual private networks to reach international services offering event-based contracts on political, economic, and other outcomes.

These preliminary exchanges have not produced any announced policy shifts or implementation timelines, and the regulator continues to emphasize consumer protection priorities in all public communications while internal reviews examine the practical effects of the current restrictions.

Consumer Access Patterns and Platform Growth

Data from multiple sources shows that UK users have turned to overseas platforms in growing numbers, with services like Kalshi and Polymarket reporting increased activity from British participants who bypass domestic rules through technical workarounds, a trend that has prompted the FCA to assess whether existing measures remain effective in their original form.

Global volumes on prediction market venues have expanded rapidly, reaching levels that Bernstein analysts project will hit $240 billion by the end of 2026, and this expansion coincides with heightened interest in contracts tied to elections, economic indicators, and other real-world events that attract both retail and professional traders worldwide.

Coordination Requirements for Potential Changes

Any modification to the existing framework would require close collaboration between the Financial Conduct Authority and the Gambling Commission, particularly for contracts involving non-financial events that fall under gambling regulations rather than pure financial oversight, creating an inter-agency process that must address overlapping jurisdictions before any new rules could take effect.

Those involved in the discussions have highlighted that non-financial prediction products would need separate evaluation under gambling statutes, whereas financial instruments would stay within the FCA's direct remit, a distinction that adds layers of complexity to any potential easing of restrictions.

Current Regulatory Position

The FCA has reiterated its support for maintaining the ban on grounds of consumer harm prevention and the inherently speculative character of these products, statements that appear in official communications even as behind-the-scenes talks continue with industry participants, and no formal proposals have emerged from these initial contacts.

Industry representatives have pointed to the latest perimeter report on regulatory scope, which includes coverage of prediction market products, as a reference point for understanding how the authority might adjust its approach in response to technological and behavioral shifts among consumers.

Conclusion

The ongoing conversations between the Financial Conduct Authority and trading platforms reflect an effort to balance longstanding consumer safeguards with observable changes in how UK residents engage with global prediction market services, and outcomes remain uncertain pending further inter-agency coordination and internal analysis. Data on trading volumes and access patterns continue to inform these reviews, while the regulator's core stance on risk mitigation stays consistent in public messaging.