Britain's Financial Conduct Authority (FCA) is reported to be reviewing whether to ease regulations that have restricted retail investors' use of prediction markets.

Foreign media outlets including blockchain publication Cointelegraph reported on Sept. 7 that the FCA contacted prediction market operators while discussing whether to relax a ban on binary options for retail investors that has been in place since 2019.

Platforms under review include prediction market services such as Polymarket and Kalshi. These platforms offer binary-options-style contracts on the outcomes of specific events such as sports, politics and weather. The FCA has regulated prediction market products as binary options since April 2019. At the time, it banned companies from selling, marketing and distributing binary options to retail consumers.

Christopher Woolard (크리스토퍼 울러드), the FCA's executive director for strategy and competition, called binary options at the time "gambling products dressed up as financial products".

Some retail investors in Britain are already reported to be using virtual private networks to bypass the rules and trade on U.S.-based Kalshi and Polymarket. Bernstein Research forecast in April that total trading volume in the prediction market industry could rise to about $240 billion in 2026 and to $1 trillion by 2030.

If the FCA withdraws the 2019 ban, Kalshi and Polymarket could face regulatory issues similar to those they are experiencing in the United States. In the United States, state gambling regulators are suing the two companies over sports event contracts.

New Jersey authorities last week asked the U.S. Supreme Court to hear a case related to Kalshi. If the Supreme Court takes up the case, standards could become clearer over regulatory authority between state governments and federal authorities for prediction markets.

The FCA has not actually lifted the ban on prediction markets. The talks are at the stage of reviewing the possibility of easing existing regulations that have restricted retail investors' access to prediction markets.