The UK Gambling Commission (UKGC) has set out its position on prediction markets, stating that such products would fall within existing gambling law if offered in Great Britain and would require appropriate licensing.
In a blog post published yesterday (4 February), the regulator’s director of strategy, Brad Enright, discussed prediction markets, the alternative to sports betting that has expanded rapidly – and controversially – in the US.
The UKGC said it has received enquiries about whether similar products could operate legally in Great Britain and how they would be regulated.
Enright stated that any commercial product meeting the legal definition of gambling under UK legislation must be licensed and regulated by the regulator.
The only established exception is spread betting, which is governed by the rules of the Financial Conduct Authority (FCA), not the UKGC.
The UKGC feels that current prediction market operators, depending on their business model, would likely be classified as betting intermediaries under UK law, similarly to betting exchanges.
While prediction markets may differ in presentation, the regulator said their underlying mechanics closely resemble betting exchanges, a model that has operated legally in the UK since 2000. The betting intermediary licence already exists to regulate such activity.
Enright pointed out that where they are within the UK’s regulatory scope, the regulator requires licensed operators to comply with its standards on consumer protection, integrity, and crime prevention.
He went on to say that compliance with these standards is actively monitored and that the regulator takes enforcement action if it identifies breaches.
In addition, operators of financial services, outside those considered gambling services, are required to be authorised by the FCA.
Addressing availability in Great Britain, Enright said that the UKGC does not believe a prediction market operator could credibly classify its product as non-gambling if launched domestically.
Prediction markets operators could face liability
Enright also noted that not being licensed to operate can result in criminal liability. That liability carries with it the potential for actions against existing licences, as well.
While he did not specifically state that operating a prediction market without proper licensure could result in the revocation of an existing licence, this is reminiscent of proceedings in some US states.
Some state regulators, such as in Ohio, have threatened to withdraw or suspend a gaming licence for an operator if it engages in the prediction markets space, even if the latter is operating in another state.
Enright said that the UKGC won’t comment on ongoing legal debates surrounding prediction markets in the US or other jurisdictions. However, he highlighted the structural differences between the UK and US gambling landscapes.
Sports betting is long established across Great Britain and operates under a national regulatory framework.
Sports betting was officially legalised and regulated in the territories through the Betting and Gaming Act 1960, which came into force on 1 May 1961.
In contrast, legal sports betting in the US has only been in development, generally speaking, since 2018, and remains subject to state-by-state regulation.
There are no federal regulations to oversee the market nationwide, although attempts are being made to change that.
Enright also questioned whether the commercial impetus behind prediction markets in the US would translate to Great Britain, given the maturity and ubiquity of the UK betting market.
He described the globalisation of gambling as a salient factor in its ongoing oversight approach.
He concluded by explaining that the UKGC will continue monitoring international developments to ensure it remains positioned to regulate effectively and uphold standards across the British market.