Position Paper
Prediction Markets

Licensed lottery and betting operators are required to implement comprehensive responsible gambling programmes as a condition of their operating licences. These typically include effective age verification, self-exclusion mechanisms, deposit and spending limits, affordability assessments, prohibitions on credit gambling, mandatory access to support resources, and regular third-party audits. The WLA’s Responsible Gaming Framework, and the responsible gaming standards embedded in national licensing regimes worldwide, represent decades of investment in evidence-based player protection.

Prediction market platforms operating without such licences are not subject to these obligations.

The WLA identifies the following specific consumer protection concerns arising from
unregulated prediction markets:

The financial contract structure of prediction markets, combined with real-time in-event trading functionality, creates conditions strongly associated with problem gambling. The ability to open and close positions continuously on live sporting events mirrors in-play sports betting products — which carry some of the highest rates of gambling harm. The introduction of combo bets (parlay-style combinations) further amplifies the risk profile, as research consistently identifies parlay-type products as disproportionately associated with problem gambling behaviour.

The complete absence of responsible gambling safeguards on most unregulated prediction market platforms means that vulnerable individuals are exposed to these elevated risks without any protection. This creates a public health concern.

The business model of most commercially significant prediction market platforms depends, in whole or in part, on regulatory arbitrage: the deliberate exploitation of gaps and ambiguities in applicable regulatory frameworks (eg. gambling regulatory frameworks vs financial) to avoid the costs and constraints of compliance. Common strategies include incorporation in jurisdictions with limited gambling regulation, characterisation of products as commodity or financial derivatives to attract financial regulatory oversight (which lacks gambling-specific consumer protections), and reliance on jurisdictional ambiguity in cross-border digital services.

The result is a sector offering products that are, in substance, sports betting — but that bear none of the regulatory obligations that apply to licensed sports betting operators. Industry analysis has documented operators actively relying on point-of-supply legal arguments to avoid licensing requirements in jurisdictions where their customers are located, and operating without geo-blocking in jurisdictions where their products are clearly illegal.⁹ This is not regulatory innovation. It is regulatory evasion, and it causes direct harm to consumers, to sport, and to the regulated sector.

The WLA notes with particular concern, the narrative strategy that has enabled this arbitrage. The financial services framing of prediction markets has demonstrably enabled operators to attract venture capital investment that would otherwise be unavailable for gambling businesses, and to access customers in markets — including large US states such as Texas and California — where sports betting remains prohibited. The regulatory classification is not incidental to the business model; it is central to it.

Licensed lottery and sports betting operators operate under extensive and costly regulatory obligations. They pay license fees, fund responsible gambling programs, contribute to sports integrity monitoring systems, comply with anti-money laundering requirements, meet advertising restrictions, and pay applicable taxes — a significant portion of which flows to public good causes including sports development, healthcare, and social welfare. WLA members are specifically constituted to return a material share of their proceeds to public benefit.

Prediction market operators that avoid these obligations enjoy a structural competitive advantage that is entirely the product of regulatory evasion rather than superior product quality or genuine innovation. This competitive distortion is harmful not only to individual licensed operators — it threatens the public funding streams that depend on a viable, sustainable regulated gaming sector. It also sets a dangerous precedent: that sufficient scale and lobbying capacity can substitute for regulatory compliance.

In a recent US study, Lotto Research found that 32% of players who intend to use prediction markets explicitly state they will reduce their lottery spend¹⁰.

The WLA calls for urgent regulatory clarification in all jurisdictions where prediction markets offer or even plan to offer sports events or other event contracts. The applicable test must be functional and economic: if a product offers a financial return contingent on the outcome of an event — sporting, political, or otherwise — then it constitutes a wager or bet. It must be licensed and regulated as such, irrespective of the operator’s preferred label.

This principle is consistent with the established regulatory approach to other financial products and has been explicitly endorsed by gambling regulators in the UK, Germany, and other mature European jurisdictions. The jurisdictions that have moved to block or ban unlicensed prediction market platforms — including Belgium, France, Portugal, and others — have correctly applied this functional test. The WLA urges all jurisdictions to do the same.

A relevant domestic policy parallel reinforces this approach. In 2024, Singapore announced the regulation of blind boxes — consumer products whose contents are concealed at point of sale and assigned randomly — under its gambling legislation. The rationale was explicitly functional: the product mechanics, specifically the element of chance in determining value, were considered sufficiently analogous to gambling to warrant equivalent regulatory treatment, regardless of how the product was marketed or categorised by its sellers. The same logic applies with equal force to prediction market contracts on sporting and other event outcomes. The substance of the activity — paying money for a return whose value is determined by an uncertain future outcome — is what defines the appropriate regulatory treatment, not the label the operator attaches to it. Singapore’s willingness to regulate blind boxes on functional grounds provides a clear and locally grounded precedent for applying the same reasoning to prediction markets.

The WLA calls upon the following stakeholders to act without delay:

Prediction markets operators that accept money from consumers in exchange for a financial return contingent on a sporting or other event outcome may, in the absence of an appropriate local licence, raise serious questions under gambling and sports-betting laws in the jurisdictions where they operate. This situation cannot be considered a regulatory grey area, but rather a legal position that has been clearly articulated by gambling regulators across Europe and, more recently, by several US state authorities. At the same time, the rapid growth of unlicensed prediction-market activity—from negligible levels to an estimated annual volume exceeding USD 60 billion within two years—does not alter that legal assessment. Instead, it underscores the need for timely and proportionate regulatory and enforcement responses.

The sector has grown by exploiting regulatory ambiguity, relabeling established gambling products, and lobbying aggressively to maintain its exemption from the oversight obligations that protect consumers and safeguard the integrity of sport. The costs of these regulatory inconsistencies are borne by consumers who lack the protections they would have in a licensed environment, by athletes and sporting competitions exposed to unmonitored integrity risks, and by regulated operators who compete on an uneven playing field.

The WLA rejects the characterization of this issue as a question of regulatory philosophy or the pace of innovation. The harms are concrete; the obligations are clear, and the international frameworks — including the Macolin Convention — already provide legal architecture for an effective response. What is required is the political will to apply it consistently and without delay.

In this context, it is worth noting that the regulated lottery sector holds a decisive advantage: trust. A 2026 Lotto Research study found that 83% of players trust lotteries, against 40% for FanDuel and 38% for DraftKings, a foundation on which a credible, consumer-centred alternative to unregulated prediction markets can and should be built.

We call upon all stakeholders to act with the urgency this situation demands. The protection of consumers and the integrity of sport are not negotiable. The regulated lottery and betting sector exists to serve the public interest, and it cannot fulfil that purpose while competing against an unlicensed, unmonitored, and unaccountable parallel industry — however innovative that industry claims to be.