If I have understood correctly what Fabian John has just told me, the Germans can legally trade on the British prediction exchanges regulated by the Financial Services Authority (like TradeFair Spreads or SpreadFair), but not on those regulated by the Gambling Commission (like BetFair, Betdaq, or TradeFair Binaries).

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Fabian John (who runs a web forum for the German day-trading community):

Spread Betting/ Spread Trading Companies are regulated by the Financial Services Authority (FSA). (You are using the term “prediction market”, I call it “financial service provider”. This is easier for me to explain how the market works.)

So first, a financial service provider has to be regulated by the domestic regulator. A new EU law (MiFID => http://en.wikipedia.org/wiki/MiFID) allows every [regulated] company doing cross over business to any country within the EU. All they need is the so called “EU passport” and a “Notice to the Regulator” of the target country (for Germany: BaFin www.bafin.de). Once they get the “OK” they can start to sell products to the clients in the target market. They can start marketing campaigns, publishing Ads on- and offline, etc.

For as bookmaker-classified companies, this is not allowed. They can’t do marketing and advertising, except they have a valid license. BetFair doesn’t have an own German license (there are just 4 private) but they cooperate with a company which have one. This is the only way way they can offer bets to German clients. TradeFair binaries, ChoiceOdds etc. are unregulated markets, classified as online gambling. Usually, German traders are NOT allowed to gamble and trade there. ChoiceOdds (www.choiceodds.com) for instance does not accept any German residents.

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