PREDICTION MARKETS
One key characteristic of U.S. prediction markets is their peer- to-peer nature. Traders use the platform to find a counterparty rather than receiving odds from the house. In this respect, they are very similar to UK betting exchanges, with the crucial difference being that, in the UK, they are regulated by the UK Gambling Commission (more on this later). In the U.S., prediction markets operators fall into two categories: those, like Kashi, who are trying to show they offer a legal, regulated product; and those, like Polymarket, which is an offshore crypto-based prediction market operator. On a side note, the nature of trades or contracts is such that their value changes as the probability of an outcome rises or falls. Price fluctuations are the result of the collective brain changing its mind as new information emerges. Every time a trader buys or sells it removes or adds trades to the pool, affecting their price. A novel feature of prediction markets is that a position can be cashed in before the eventual outcome is determined, giving trades an in-play element. Events at the 2026 Australian Open tennis men’s semi-final shows just how wild these fluctuations can be. In the match, a 5-set epic between veteran Novak Djokovic and Jannik Sinner, momentum swung repeatedly between the two players. At one point, Kalshi’s price went from ¢76-¢26 in favor of the Serb to ¢33-¢67 just seconds later. 5 With around US$12 million being staked, there would appear to be enough liquidity to make a sizeable speculative profit, and no one can question the thrill of such a wild ride. There are also emerging bet builder-type mechanics which allow for accumulator or parlay-style bets to be placed. In summary, prediction markets offer individuals the chance to do things that were once recognized as betting in the U.S. and which are still recognized as betting in other markets, and with some characteristics of sophisticated mainstream sports betting. The main difference with prediction markets, which their promotors point to to argue against them being defined as sports betting, is that they use platforms and language more akin to that of financial trading. This, they claim, provides a different user experience and will appeal to a different audience. In legal filings against the CFTC and state regulators, Kalshi’s lawyers have built a documented history of this different audience claim. 6 All of this is not an attempt
settle the legal arguments; just to define the product which could soon be making an appearance in Europe.
Transposing prediction markets to Europe Market conditions have made prediction markets a success in
the US, but what chance they will come to Europe? United Kingdom (and Ireland and Austria)
Whilst they are positioned differently, prediction markets are already quite established in the UK. Sports bets are the dominant trades on betting exchanges, but the UK has some of the world's most liquid markets for politics (e.g., General Elections, next Prime Minister) and current events (e.g., interest rate changes, Oscar nominees/winners). 7 The Gambling Commission (UKGC), the UK regulator confirmed this view in a blog post. 8 “Subject to the specific business model a 'prediction market' operator wished to offer in Great Britain, it would appear current products would fall within the definition of a ‘Betting Intermediary’ under UK legislation. Whilst the presentation of prediction markets may differ, their core aspects are akin to what in the UK would be described as a 'Betting Exchange.' The betting intermediary gambling licence exists to cover such business models.” They went on to say: "If a prediction market operator was to launch here in Great Britain, we do not believe they would be able to classify themselves as [offering] non-gambling products." In practice, this means that a platform would need to obtain a Gambling License, a requirement of which are strict KYC checks and AML protections. This would seem to go against the anonymous, crypto-native nature of many decentralized prediction markets. There are a couple of other reasons why Kalshi et al may struggle to gain a foothold in the UK. The first is a regulatory split in the form of the Binary Options ban. In 2019, the Financial Conduct Authority (FCA) banned the sale of binary options to retail consumers. Because many prediction markets
5 https://sigma.world/news/kalshi-win-totals-market-expanding-sports-footprint/ 6 KalshiEX LLC v. CFTC (D.C. Cir. 2024) and Commonwealth v. KalshiEX LLC (MA Superior Court, 2026). 7 https://traderline.com/education/betfair-liquidity-guide 8 https://www.gamblingcommission.gov.uk/blog/post/prediction-markets-heres-what-you-need-to-know
IMGL MAGAZINE | JUNE 2026
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