What are Prediction Markets?
As defined by the UK Gambling Commission, prediction markets are:“platforms which enable participants to trade event-based contracts on markets including financial, sports, and political events.”
In simple terms, a prediction market is a place where people buy and sell bets on what will happen next, such as who will win a sports match or whether an important event will occur.
Are Prediction Markets Still Sports Betting?
UK prediction markets may sound similar to betting exchanges; they are, but there are noticeable differences.
Prediction markets are essentially a form of betting because people put money behind their view of an uncertain future outcome. In Great Britain, the Gambling Commission generally treats commercial prediction markets as gambling products, meaning operators would usually need the appropriate licence to offer them to UK customers, like the licence this
list of UK betting sites
holds.
The main difference from a normal outright bet lies in how the price is determined. With a bookmaker, you accept fixed odds set by the bookmaker. In a prediction market, people buy and sell outcome contracts, so the price changes as new information and market opinion evolve. Despite this more exchange-like trading format, the underlying activity is still generally treated as betting in the UK.
Prediction Markets: An Example
Using a football market (given its popularity with British bettors), UK prediction markets typically ask a question about a specific outcome. For our example, we’ve used the following:
- Will Arsenal win the 2026/27 Premier League?
Bettors who believe the Gunners will win can place the bet on this outcome, much in the same way as an outright bet. If they are the title winners, then the bet will be paid out.
It is very similar to an outright bet in what you are predicting, but the mechanics are different; an outright is normally a fixed-odds wager with a bookmaker, while a prediction-market position is usually a tradeable contract whose price moves throughout the season.
People can trade their views as the table, injuries, transfers, fixture difficulty, and results change throughout the season, but this can depend on whether you can find someone else willing to accept the trade at a lower/higher price than the one that was initially taken.
- You
buy 10 Arsenal-to-win contracts at 40p
each,
costing £4
in total.
- Arsenal win: each
contract settles at £1, so you
receive £10;
gross profit is £6
before fees.
- Arsenal do not win: the contracts
settle at £0; you
lose £4.
- If Arsenal improve during the season and the
contracts rise to 65p, you might
sell all 10 for £6.50
before the title is decided, locking in a
£2.50 gross gain
before fees.
So the contract’s price acts a little like live, crowd-set odds. Buying at 40p means you believe the true chance is greater than 40%; selling at 65p means you no longer want to hold that exposure at the higher market-implied probability.
Prediction Markets UK: Are They Legal?
Prediction markets can be legal in the UK, but only when they are offered through the appropriate regulated route. In Great Britain, the Gambling Commission generally views commercial prediction markets as gambling products because users risk money on uncertain real-world events, such as a Premier League winner, an election result, or an economic outcome. A provider wanting to offer these markets to British customers would therefore normally need the relevant Gambling Commission licence.
The fact that a platform calls the activity “trading” does not automatically make it a financial service rather than a form of betting. Prediction-market users may buy and sell contracts whose prices change as opinion and information change, but the underlying transaction can still amount to a bet. The Commission has suggested that an operator matching participants in this way would likely require a betting-intermediary licence, similar to the regulatory category relevant to betting exchanges.
What Prediction Markets Can You Wager On?
Prediction markets can cover almost any future event with a clear outcome and a reliable way to confirm the result.
The most common markets involve sports, where users can take positions on match winners, tournament champions, final scores, player awards, or season-long outcomes such as which club will win the Premier League.
They can also cover politics, the economy, finance, weather, technology, cryptocurrency, and entertainment. Examples include whether a party will win an election, whether inflation will exceed a set figure, whether interest rates will change, whether Bitcoin will reach a particular price, whether a hurricane will make landfall, or which film will win Best Picture.
The key requirement is that the market has precise rules; for example, a stated deadline and an official source used to settle the outcome. Bettors are always advised to check the platform they plan to use for a list of prediction markets to ensure it’s right for them.
Prediction Markets FAQ
🧐 What are prediction markets?
Prediction markets are platforms where people buy and sell positions on what they think will happen in the future, such as a team winning the Premier League.
🤔 How do prediction markets work?
Users trade event contracts, usually based on a Yes/No outcome. Prices can rise or fall as people react to new information, and users may be able to sell before the event is decided.
🇬🇧 Are prediction markets legal in the UK?
They can be, but platforms generally need the appropriate Gambling Commission licence to legally offer gambling-style prediction markets to customers in Great Britain.
🤞 What are the best prediction markets?
The best prediction markets are typically sports, as there are usually more options available for punters.
😬 What prediction markets are legal in the UK?
A prediction market is legal to use in Great Britain when the operator is properly licensed and permitted to offer that product to GB customers.
