UK Betting Exchanges Shrink as Rivals Eye Prediction Markets
The UK Gambling Commission’s Industry Statistics annual report, published on 18 September, has revealed a sharp long-term decline in Britain’s regulated betting exchange sector, just as unlicensed offshore “prediction market” apps report explosive growth among UK users. The figures cover the financial year April 2025 to March 2026 and sit alongside a wider debate over whether products like Kalshi and Polymarket should ever be allowed to operate here at all.
What’s actually changed
Betting exchanges now make up just 3.79% of Gross Gambling Yield (GGY) in the UK, with the figure sitting at £92.66m for April 2025-March 2026, and GGY on betting exchanges has almost halved since 2016/17, when it stood at £171.53m.
That decline has been driven despite the fact that established names such as Betfair Exchange and Spreadex remain active, and firms including Matchbook and Smarkets have refreshed their offerings.
GGY on betting exchanges has almost halved since 2026/17 despite the continued presence of the Betfair Exchange and Spreadex, and data shows exchange GGY has contracted faster than high street land-based betting shop revenue in that time, dropping by 46% compared to 26.8%.
Over the same period,
general remote sportsbook GGY rose from £1.75bn to around £2.5bn
, showing punters have largely moved to fixed-odds sportsbooks rather than exchanges.
The contrast is sharpened by what’s happening outside UK licensing entirely.
The FCA is reportedly reviewing its approach to retail prediction markets as Kalshi and Polymarket gain users overseas, though its 2019 binary-options ban remains in force.
Under current rules,
offering these products requires navigating two regulatory hurdles: FCA permission for financial contracts and a Gambling Commission license for other events.
The Gambling Commission has said that, depending on their business model, prediction market operators offering sports or political contracts would likely be treated as a licensable betting activity rather than something outside its remit, and it
warns unlicensed prediction-market operators must not target UK consumers.
For now,
major prediction markets companies like Polymarket and Kalshi are not allowed to operate in the UK at present, though their websites remain accessible even if it’s not possible to open an account and place a trade in the UK.
What it means for you
If you already hold an account with a licensed exchange such as Betfair Exchange, Smarkets, Matchbook or Spreadex, nothing changes for you directly: these operators still sit under Gambling Commission licence conditions, meaning GamStop self-exclusion, deposit limits and the standard UK complaints and ADR routes all still apply. The concern raised by this data is about where custom goes next as exchange volumes keep shrinking. Offshore prediction platforms currently sit in a regulatory grey zone for UK users — accessible in practice, but without a domestic licence.
Overseas platforms may leave British users without domestic complaint procedures, compensation coverage or regulatory protection.
Anyone tempted to try these apps should understand that using them from the UK falls outside the safety net this site regularly covers: no statutory levy contribution, no verified GamStop link, and no guarantee of a UK-recognised dispute process if something goes wrong.
The bigger picture
This sits inside a much larger shake-up of how Britain regulates online risk-taking. The Gambling Commission’s own annual figures show the industry as a whole growing, driven by online casino and slots rather than by exchange-style betting. Regulators here aren’t currently proposing to widen access to prediction markets —
the FCA’s March perimeter report said the agency would consider whether to conduct further work on access or clarify the regulatory boundary, though that wording leaves the review open but does not represent approval for Kalshi, Polymarket or another platform.
Until that review concludes, the direction of travel described in the Commission’s own data — shrinking regulated exchanges, rising unregulated alternatives abroad — is likely to keep pushing the question of prediction markets up the UK’s gambling reform agenda alongside stake caps, affordability checks and the wider White Paper programme.
Sources
