UK Urged to Act as Polymarket Takes Bets on Whether HSBC and Lloyds Will Fail

British authorities are facing calls to intervene after it emerged that the online prediction market Polymarket has been taking bets worth tens of thousands of dollars on whether HSBC and Lloyds, two of the United Kingdom's largest banks, will fail.

According to figures cited in the reporting, Polymarket has allowed users to place positions worth $77,507 on whether the banks will go under by the end of the year. Polymarket, a US-owned platform, offers betting markets on a wide range of outcomes, from sporting events to political contests to more speculative propositions.

The revelation has prompted concern among critics who argue that prediction markets taking bets on the solvency of systemically important financial institutions could affect public confidence in those institutions, regardless of their actual financial health. Unlike traditional instruments such as credit-default swaps, prediction markets like Polymarket operate largely outside the regulatory frameworks that govern conventional finance.

HSBC and Lloyds are among the largest banks in the UK and are both subject to extensive regulatory oversight by British financial authorities. There is no indication from the available reporting that either bank faces imminent financial distress; the concern raised relates instead to the existence and visibility of the betting markets themselves.

It remains unclear whether UK regulators plan to take any specific action in response to the calls for intervention.