Prediction markets: Global approaches to an emerging challenge
Guest article provided by IAGR partner, Greo Evidence Insights.
Published February 2026 (with an update in April 2026)
Prediction markets pose unique challenges for regulators worldwide. These platforms often fall into a grey area between traditional gambling and high-risk investments, and different countries take varied approaches. On prediction market platforms, individuals can place bets on virtually anything, from elections and economic indicators to entertainment outcomes, rather than being limited to specific categories like sports. Unlike traditional betting, prediction markets do not act as the house; instead, individuals trade directly with one another, and the platform simply matches buyers and sellers. How prediction markets are classified, either as betting or as financial products, largely determines the rules they must follow.
In the United States, prediction markets are generally considered financial products. The Commodity Futures Trading Commission (CFTC) oversees most prediction market platforms as a type of commodity trading, while the Securities and Exchange Commission (SEC) monitors those that resemble risky investment trading, although in practice few fall under SEC oversight. However, the federal rules do not capture the full regulatory landscape. Several U.S. states and their gaming regulators have taken enforcement actions, reasoning that certain prediction market platforms should be considered illegal gambling under state law. In addition, some gambling regulators point out that in their jurisdictions, event-based contracts meet statutory definitions of betting and require state licences. As a result, some states have issued cease-and-desist orders or initiated court proceedings, claiming that federal rules don’t override state laws. Operators may therefore face both federal and state scrutiny, creating legal uncertainty.
Concerns have been raised about the gambling-like nature of these platforms. On February 9, 2026, the National Council on Problem Gambling’s (NCPG) Board of Directors passed a resolution calling on prediction market platforms to promote the National Problem Gambling Helpline, arguing that trading on event outcomes is similar to other types of betting and poses the same risks for consumers.
In the United Kingdom, by contrast, markets on politics, sports, and entertainment are mostly treated as gambling and regulated by the Gambling Commission. At the same time, spread betting, a form of speculation on the price movements of financial assets like stocks or commodities, is regulated and monitored by the Financial Conduct Authority (FCA). Meanwhile, in Denmark, platforms like Polymarket and Kalshi are accessible, but the Danish Gambling Authority cannot block them unless there is clear evidence they are targeting the local market, such as using local payment methods or currency. Enforcement will only occur if these criteria are met, despite the use of prediction markets in the country.
As prediction markets become more popular, they pose greater risks, especially for vulnerable people. Prices can swing quickly, and individuals often underestimate the financial and psychological risks involved. They can encourage risky behaviours such as betting more than an individual can afford, chasing quick profits, and being influenced by herd behaviour.
As prediction markets and their hosting platforms evolve, regulators face the challenge of protecting individuals in jurisdictions that lack clear rules.
Recently published gambling research
Below is a selection of resources that may help inform regulatory action on prediction market platforms. Please note that resources are selected based on relevance to the topic without formal assessment of quality, and inclusion does not imply endorsement.
- Are prediction markets and event-based contracts the latest example of gamblification?
- Prediction markets: An emerging form of gambling?
- All bets are on: Addiction, prediction, regulation, and the future of financial gambling
- Development and validation of the Trading Disorder Scale
- Risk factors for problem gambling: a comparison of day traders and non-day traders in Canada
- The effects of financially focused self-concept and gambling motives on the relationships between cryptocurrency trading, day trading, and gambling
Evidence-informed action
Regulators can consider the following examples when developing regulations on prediction markets.
Great Britain
The UK Gambling Commission recently addressed growing interest in prediction markets, following several enquiries about their potential impact on gambling regulation. In Great Britain, any business that allows an individual to bet on the outcomes of events such as financial trends, sports, or politics would likely be classified as a gambling operator. This means they must be licensed and regulated by the Gambling Commission. While prediction markets are still emerging in other jurisdictions, Great Britain has a more established regulatory framework for gambling, and platforms offering prediction markets must comply with existing rules around fairness, consumer protection, and market integrity.
Germany
In Germany, prediction market platforms that allow individuals to bet on non-sporting events such as politics or world affairs do not meet the criteria for licensed gambling under German law and are effectively considered illegal under the Interstate Treaty on Gambling (GlüStV 2021). German authorities have made it clear that these markets, if unlicensed, are treated as illegal gambling, and steps have been taken to block and penalize operators targeting German consumers.
Singapore
Singapore classifies prediction market platforms as illegal under the Gambling Control Act 2022, which regulates both physical and online gambling. The Act requires any platform that allows users to bet on event outcomes, such as financial predictions or other markets, to be licensed by the Gambling Regulatory Authority (GRA). Currently, Singapore Pools, the state-owned operator, is the only legal provider of betting services in the country. The GRA has specifically classified platforms like Polymarket as unlawful gambling operators and blocked access to them as of January 12, 2025.
The Netherlands
In February 2026, the Dutch gambling regulator, Kansspelautoriteit (KSA), ordered Polymarket to stop offering its services in the Netherlands, determining that its event-based contracts constitute illegal gambling under Dutch law. The regulator stated that platforms where users bet on uncertain future events need a Dutch gambling licence and could face fines if they don’t comply. This action reflects the Netherlands’ position that prediction markets fall within the scope of existing gambling legislation where they meet statutory definitions of games of chance.
New Zealand
New Zealand’s Department of Internal Affairs (DIA) has clarified that prediction market platforms like Kalshi and Polymarket are classified as gambling under current laws. As a result, these platforms? cannot offer their services to New Zealand residents without the proper license. The DIA has officially notified these platforms that, under existing gambling laws, any unauthorised gambling product, including prediction markets, cannot be provided to customers without the necessary license. Taking bets from New Zealand residents without a license is a legal violation. This stance reflects a broader interpretation of national gambling laws, where event-based contracts are considered gambling products that require specific regulatory approval.
Canada (this section was added April 2026)
In Canada, prediction markets have begun to emerge within an established regulated framework. Forecast contracts are classified as securities products overseen by the Canadian Securities Administrators (CSA), an umbrella body of provincial and territorial securities regulators, which grants exceptions only to dealers registered with the Canadian Investment Regulatory Organization (CIRO), the industry’s self-regulatory organization. Firms and individuals not registered with CIRO are not permitted to operate or trade these contracts. Provincial regulators retain independent authority, and there is no federal body asserting overarching jurisdiction. Firms such as Wealthsimple and Interactive Brokers Canada (via ForecastEx) have received approval to offer yes/no contracts on economic or climate outcomes, with each contract priced between $0 and $1 and paying out $1 if the predicted event occurs. Approved platforms are currently restricted from offering contracts tied to sporting events or political elections. Critics have raised concerns that, despite regulatory oversight, forecast contracts can still be highly speculative for retail investors, since each contract can result in a total loss of the invested amount.
