Prediction Markets Platform and Regulation: What Brokers Must Know in 2026
Prediction markets have arrived, and they represent one of the most exciting growth opportunities for brokers in years. With over $702 million in daily trading volume recorded in 2025 and major brokerages like Robinhood and Webull already offering event contracts, forward-thinking brokers are moving quickly to capture this fast-growing market.
KPMG, in its white paper “Prediction Markets in the Financial Sector,” makes a compelling case: brokers should treat event contracts as a strategic opportunity, not a peripheral product. As Finance Magnates reported, the firm encourages banks, asset managers, and brokers to integrate these instruments into their core trading infrastructure, positioning themselves at the forefront of a rapidly maturing asset class.
The good news? The regulatory frameworks needed to operate compliantly are now taking shape across key jurisdictions. For brokers ready to act, the path to launching a prediction markets platform has never been clearer.
What Exactly Is a Prediction Market?
A prediction market is a derivatives market where participants trade contracts tied to the outcome of future events. Each contract poses a simple binary question: Yes or No, and pays out based on whether a specified event occurs. Will the Fed cut rates in March? Will Bitcoin reach $150k? Will a particular team win the championship?
This simplicity is what makes prediction markets so powerful for user engagement. Unlike complex derivatives, a binary Yes/No question is intuitive, attracting sports fans, crypto-native traders, and entertainment-oriented audiences that traditional forex and CFD instruments rarely reach.
The Regulatory Landscape: Clear Pathways Are Emerging
Regulators around the world are increasingly recognising prediction markets as legitimate financial instruments, creating well-defined pathways for compliant operation. Understanding these frameworks gives brokers a strong foundation to launch with confidence.
United States
The US has the most developed regulatory framework for prediction markets. The CFTC oversees event contracts traded on registered markets, and several clear routes exist for brokers to enter:
- DCM Designation: Operate as a Designated Contract Market, a federally regulated exchange. Kalshi holds DCM status, and Polymarket US (QCX LLC) recently received an amended CFTC order of designation, enabling intermediated access via Futures Commission Merchants.
- Introducing Broker (IB) Model: Register as an IB and partner with an existing CFTC-registered DCM. This is the fastest route to market, lower barriers, proven compliance framework, and no need to build exchange infrastructure from scratch.
- Acquisition or Partnership: Partner with or acquire an already-designated DCM/DCO, as Polymarket demonstrated when it acquired CFTC-registered QCX for $112 million, a signal of just how valuable regulated market access has become.
Product-level governance is important: CFTC Regulation 40.11 defines which event categories are eligible, and brokers benefit from implementing a structured product approval process to ensure each market aligns with applicable rules before launch.
United Kingdom
The UK offers a pragmatic dual-track framework. Financial spread bets and derivatives referencing financial instruments fall under the FCA. Non-financial event contracts, covering sports, elections, and entertainment, are regulated by the UK Gambling Commission (UKGC) under the Gambling Act 2005. Brokers can pursue the appropriate authorisation for their target market categories, and the FCA and UKGC maintain a collaborative framework through a Memorandum of Understanding.
European Union
Under MiFID II, event contracts tied to recognised financial instruments are classified as financial instruments. Non-financial event contracts fall under member-state licensing regimes. For brokers utilising crypto rails, the EU’s MiCA regulation provides a clear authorisation framework, giving operators certainty as they build out their infrastructure.
Singapore & Australia
Singapore maintains a clear distinction: financial event contracts require MAS licensing, while non-financial ones require a licence from the Gambling Regulatory Authority. Australia’s framework is managed through the Interactive Gambling Act 2001, with Australian-licensed operators able to offer sports wagering products. Both jurisdictions offer well-defined licensing paths for compliant operators.
Core Compliance: Building on Solid Ground
A strong compliance framework isn’t just a regulatory requirement; it’s a competitive advantage. Brokers who get compliance right from day one build trust with traders and partners alike. Key areas include:
- KYC and AML: Robust identity verification builds trader confidence and satisfies regulators across all jurisdictions. Platforms using crypto settlement benefit from implementing FATF-compliant KYC, sanctions screening, and travel rule compliance from the outset.
- Market Surveillance: Proactive surveillance, including audit trails, insider trading monitoring, and manipulation detection, demonstrates institutional-grade operational maturity. Leading platforms like KalshiEX are already setting high standards in this area.
- Product Governance: A structured product approval process, covering contract wording, resolution criteria, and settlement, ensures each market is compliant before it goes live. This discipline strengthens both regulatory relationships and trader trust.
- Consumer Protection: Responsible trading tools, age verification, and clear eligibility checks demonstrate a broker’s commitment to sustainable growth and positive user outcomes.
Why Brokers Are Moving Now: The Strategic Opportunity
The business case is compelling. According to KPMG’s analysis, standardised event contracts can transform brokers from product sellers into marketplace operators, generating revenue from platform access, liquidity provision, and analytics alongside traditional margins.
Institutional momentum is building rapidly. As Finance Magnates reported, Jump Trading, one of the world’s largest proprietary trading firms, has begun making markets on Kalshi, becoming one of the first major prop firms to participate in event-based trading as volumes surged past $7.4 billion in a single month.
Brokers who have added prediction markets are seeing remarkable results: up to 3x user acquisition rates and 85% improvement in monthly retention compared to traditional instruments alone. The simplicity of binary Yes/No questions drives engagement in ways that complex derivatives cannot match.
The first-mover advantage is real. Most brokers have not yet entered this market. As prediction markets become part of the broker stack, early entrants are positioning themselves to capture significant market share.
Launch Fast with Leverate: The White-Label Advantage
Building a prediction markets platform from scratch takes 12–18 months and significant capital. With Leverate’s white-label prediction markets platform, brokers can go live in days, not months, backed by 19+ years of broker technology expertise.
Why brokers choose Leverate: A fully branded, production-ready platform that lets you focus on growing your business while we handle the technology. No lengthy development cycles, no
technical risk, just a fast, reliable path to market.
The platform includes everything a broker needs to compete:
- Full Admin Controls: Market creation, rule editing, and resolution managed through your dashboard with complete audit trails for compliance.
- Advanced Order Book: Full depth ladder with limit and market orders, real-time charts, and transparent bid/ask spreads, the pricing infrastructure traders and regulators expect.
- Portfolio Dashboard: Complete P&L tracking, position management, and trade history enabling the audit-trail capabilities regulators require.
- Multi-Category Markets: Financial, crypto, sports, political, and entertainment markets, subject to your licensing and local regulatory requirements.
- Full White-Label Branding: Your brand, your domain, your traders. A seamless experience that builds your brand equity.
- Mobile-First Design: Responsive across all devices with a native-feel interface that drives engagement and retention.
Leverate projects a possible 15–25% additional revenue from spreads, trading fees, and market creation for brokers who add prediction markets to their offering.
Ready to Lead the Prediction Markets Revolution?
Go live in days with Leverate’s fully branded, production-ready white-label platform. Join global brokers who trust Leverate to power their growth.
Frequently Asked Questions
What licensing options exist for offering prediction markets in the US?
The US offers three clear pathways: direct DCM designation as a regulated exchange, the Introducing Broker model (partnering with an existing CFTC-registered DCM for faster market entry), or acquisition/partnership with an already-designated DCM/DCO. The IB model is particularly attractive for brokers seeking the fastest compliant route to market.
Can I offer sports and political prediction markets globally?
Yes, with the right licensing in place. In the UK, non-financial event contracts operate under UKGC gambling licensing. In Singapore, the Gambling Regulatory Authority provides the framework. Each jurisdiction has established pathways, and a structured product-level review ensures your market categories align with local requirements.
What compliance framework supports crypto-settled prediction markets?
Crypto-settled platforms benefit from well-established compliance standards: FATF-compliant KYC and sanctions screening provide a global baseline. In the EU, the MiCA regulation offers a clear authorisation framework. OFAC guidance on wallet-level screening is well-documented. These standards give operators confidence in building compliant crypto-rail infrastructure.
How quickly can I launch a prediction markets platform with Leverate?
Leverate’s white-label solution can be configured and fully branded in days. While regulatory readiness timelines vary by jurisdiction, US DCM designation can take 6 to 52 weeks, UK or Malta gambling licences typically 8 to 40 weeks, Leverate’s platform ensures your technology is ready the moment your licensing is in place, so you can go live without delay.
Why are institutional players entering prediction markets now?
Institutional confidence is growing thanks to proven volume growth, maturing regulatory frameworks, and strong market infrastructure. Jump Trading’s entry into Kalshi’s markets alongside $7.4 billion in monthly trading volume signals that prediction markets have evolved from niche to mainstream. As KPMG noted, they are now a strategic infrastructure for the financial sector.
The Bottom Line
Prediction markets represent a transformative opportunity for brokers and fintech businesses. The regulatory infrastructure is maturing, institutional players are entering, and trader demand is surging. Brokers who act now will be best positioned to capture this growing market.
With Leverate’s white-label platform, launching is fast, simple, and backed by nearly two decades of broker infrastructure expertise. Stay ahead of the curve, and let Leverate handle the technology while you focus on growth.
Contact Leverate today to explore your prediction markets launch.
Disclaimer: This content is based on multiple sources and is provided for educational purposes only. It does not constitute financial, legal, or investment advice.
