A prominent libertarian think tank is suggesting the UK government explore prediction markets as a financial instrument for the future.
In a column for the UK newspaper The Times, Chair for the Public Understanding of Economics at the Cato Institute, Ryan Bourne, argues that Britain’s restrictive approach to prediction markets risks stifling a fast-growing financial technology that supporters say can provide valuable forecasts on economic, political and public policy events.
Britain risks missing out on “spectacular” growth
Prediction markets have experienced “spectacular” growth over the past year, with combined monthly trading volume on Kalshi and Polymarket surging from less than $5 billion last September to about $24 billion in April, according to Bourne. He argues the rapid expansion demonstrates growing demand for markets that allow users to trade on the likelihood of future events.
He contrasts that growth with the UK’s restrictive regulatory approach. It notes that the UK Gambling Commission (UKGC) classifies commercial prediction markets under gambling laws, while the Financial Conduct Authority (FCA) has also prohibited retail binary options, leaving British consumers with limited access to the products.
The column argues that prediction markets should be viewed as more than gambling, describing them as tools that can generate useful forecasts on subjects ranging from inflation and disease outbreaks to artificial intelligence and politics. It contends that well-functioning markets could provide businesses, policymakers and the public with valuable information to support planning and decision-making.
The author acknowledges concerns about gambling-related harm, insider trading and national security, citing recent cases involving confidential information. However, the piece argues those risks are not unique to prediction markets and could be addressed through targeted regulation rather than broad restrictions.
The column concludes that Britain’s current approach risks pushing consumers toward offshore platforms while limiting innovation in a rapidly expanding sector. Instead of treating prediction markets solely as gambling products, the author argues regulators should adopt a framework that encourages legitimate uses while addressing specific consumer protection and integrity risks.
Nine European regulators threaten prediction markets
Elsewhere, nine European gambling regulators have issued a joint warning to prediction market operators, pledging increased scrutiny during this summer’s World Cup over concerns that many platforms are operating without the consumer protections required under national gambling laws.
The statement was signed by regulators from Germany, Belgium, Italy, France, Spain, Portugal, Poland, Switzerland and the Netherlands. The authorities said prediction markets, which allow users to trade contracts on the outcome of sporting, political and geopolitical events, can present gambling-related risks when offered without local licenses or safeguards.
“By allowing users to place bets on the outcome of political, sporting or geopolitical events, prediction markets have several addictive features,” the regulators said, adding that those risks are heightened in jurisdictions where the platforms operate without regulatory oversight. They warned operators they could face enforcement action if they fail to comply with local laws.
The regulators also urged sports federations, leagues and teams to verify whether prediction market platforms are legally authorized before entering commercial partnerships. They said they will strengthen cross-border cooperation through information sharing and coordinated consumer awareness campaigns throughout the tournament.
The joint statement builds on earlier warnings issued by France’s gambling regulator and Germany’s Joint Gambling Authority of the States. While the UKGC did not sign the declaration, it has previously indicated that prediction markets would likely be regulated as gambling under British law.
