UK Betting Exchanges Halve as US Prediction Markets Boom
Betting exchanges are shrinking in Britain. The regulator's own figures now make that hard to argue with.
The Gambling Commission's 2025/26 Annual Report puts exchange activity at £92.66m in Gross Gambling Yield for the period April 2025 to March 2026. That works out at 3.79% of all UK GGY. Six years back, the same figure stood at £171.53m.
Nearly half the market, gone. And it went quietly. Exchange GGY is down 46%, which is a sharper fall than the 26.8% drop recorded across high street betting shops in the same window. Retail closures have had years of headlines. The exchange slide hasn't had any. Remote sportsbook GGY, by contrast, went from £1.75bn to roughly £2.5bn.
The operators haven't disappeared. Betfair Exchange and Spreadex are still the two names most players would recognise. Matchbook and Smarkets have both pushed through platform revamps. Matchbook became the first British firm to enter prediction markets in December, then signed a white label deal with ADI Predictstreet, the FIFA World Cup prediction markets partner, just before the tournament kicked off. Smarkets rebuilt its product to look and feel like a US prediction platform. Effort isn't the issue.
The US comparison is where it gets interesting. Prediction markets have exploded stateside, and Gibraltar has now set up the first standalone regulatory framework for the products anywhere. Kalshi and Polymarket are chasing billion-dollar valuations.
Jason Trost, chief executive of Smarkets, hasn't been shy about the overlap between the two formats. "They're called betting exchanges in the UK. They've existed for 20 plus years in the UK in a very legal, stable framework here," he told SBC News this year. "This concept of a prediction market coming to the UK, it's here already. It's like soccer and football, they're not apples and oranges, they're both apples."
On mechanics, he's right. Exchanges take a commission while users bet against each other. Prediction markets are derivatives platforms, where traders buy event contracts priced between $0 and $1. Both carry a financial flavour. Players treat them much the same way.
So where are the exchange punters going? Three plausible answers, and they probably all apply. Traditional sportsbooks have sharpened their act considerably. Bet builders and multi-sport accumulators are pulling in the casual and semi-sharp money that once sat on the exchange ladder. Some British users have likely drifted to prediction markets through VPNs, since the UK effectively blocks retail access to unlicensed binary-option style products. Or maybe the market never had the depth here that US operators are now finding.
For affiliates, the read is straightforward. Exchange accounts convert differently, they churn harder when pricing is thin, and revenue share on commission-based models has been compressing for years. Prediction markets offer volume and novelty, but no clear UK licensing path yet.
That path may be opening. The Financial Conduct Authority recently held exploratory talks about relaxing the restrictions that keep prediction markets out of British retail reach. On the corporate side, IG Group has acquired Underdog, a US daily fantasy sports platform that has hinted at making prediction contracts its main product. FTSE 250 firm Plus500 launched a US-facing prediction markets offering this year through a partnership with Kalshi. Serious money is positioning for something.
Whether that something includes the UK is still speculative. Prediction products that run in Britain today sit as a bolt-on to the traditional exchange, without the politics and war-based contracts that Polymarket carries in the US. The Commission's data tells you exchanges are declining. It doesn't tell you whether prediction markets would fill the gap or simply cannibalise what's left. Regulatory clarity has to come first, and the FCA talks are the thread to watch. Operators weighing a move into event contracts should be modelling both outcomes now, because the licensing question won't stay open forever.