Sports betting company Matchbook has announced plans to launch the first prediction market platform licensed in the UK next month, in a bid to compete with rapidly expanding US rivals.
Prediction markets allow users to trade positions on various outcomes. Bets can be placed on questions such as “who will win the Champions League?” and “how many weeks will Taylor Swift stay at number 1 on Spotify?”, with odds changing based on the number of bets placed.
Trading activity on these platforms has surged, from less than $100m a month in early 2024 to more than $13bn, mostly in the US. The two big American players in the sector, Kalshi and Polymarket, recorded all-time high trading volumes in November, handling about $10bn in trades.
No wonder Matchbook wants a slice. The Guernsey-based company has offered peer-to-peer betting since 2004 (bets where there is no “bookie” and gamblers’ bets are matched to each other), but its intention to bring prediction betting to the UK comes with new regulations.
In the US, prediction markets are considered commodity trades, no more of a gamble than a trade on the traditional stock market. This distinction is fundamental, as they are regulated by the Commodity Futures Trading Commission (CFTC), rather than a gaming body. This has allowed the markets to bypass state-level gambling laws which vary across the country, and have enabled companies to enjoy a much lower level of oversight, particularly under the current administration.
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UK regulators, however, have decided that prediction markets come under the scope of the Gambling Commission, setting a very different landscape for businesses intending to trade here. According to the commission, any US prediction market operating in the UK would also be classified as a betting exchange and would not be able to classify itself as purveying non-gambling products. This drastically limits any prediction market’s ability to operate in the UK.
Matchbook intends to offer both sports and politics markets on its platform, with the potential to expand into others in the future. A spokesman for Matchbook told The Observer that one of the significant draws for prediction markets is their accessibility for those not used to betting markets, describing them as “presenting many of the same markets (with a focus but not limited to sports) in a way that is easier for people to understand”.
But expanding access is also likely to come with regulatory scrutiny – at least in the UK, where a Labour government recently introduced a new gambling tax.
‘Eventually, billions of people will look at Polymarket odds as a way to make decisions’
Shane Coplan, Polymarket
Donald Trump, by contrast, has regarded prediction markets favourably ever since his election, when over $3bn was wagered on the outcome (either by overseas investors or people pretending to be one).
The CFTC under Trump recently announced its Innovation Council, which included Kalshi and its competitor Polymarket, as well as five other cryptocurrency exchanges, alongside traditional financial institutions such as Nasdaq.
Polymarket founder Shayne Coplan, who in October became the world’s youngest self-made billionaire, took this victory – and Trump’s – as proof that prediction markets were a useful source of information and even news. Coplan said in an interview he believes “billions of people will eventually look at Polymarket odds as a way to make decisions, a way to understand what’s going on in the world”. Let’s see.
Photograph by PA/Alamy