Slotegrator: Gibraltar’s latest move should feel familiar to anyone in iGaming

(AsiaGameHub) –   Gibraltar became the first jurisdiction to issue a license to a prediction market company in April. Slotegrator COO Olga Ivanchik offers her comments on Gibraltar’s decision to be a first mover in a very lucrative space.

Envision an online entertainment product with millions of users, whose legal status varies widely across different regions. In countries where it is regulated, clear safety guidelines are established, and significant tax revenues are generated. Conversely, in nations that ban or heavily restrict it, users and associated revenue are pushed offshore.

Does this scenario ring a bell?

This was likely the case for authorities in Gibraltar, who issued a license to prediction market operator ADI Predictstreet at the beginning of April, aiming to boost tax income. This move made Gibraltar the first territory to diverge from the European trend; numerous countries across the continent have banned or blocked platforms like Polymarket or Kalshi.

While Gibraltar has taken the lead, it is not acting alone. Malta is currently considering the introduction of a new category of license specifically for prediction markets, according to statements by Economy Minister Silvio Schembri.

Prediction markets themselves are not a new phenomenon, but their recent surge in popularity certainly is, and the issues surrounding them are complex. The first challenge is determining which regulatory category they belong to – are they gambling platforms? Financial exchanges? Or something entirely different? Each regulator is making its own determination; in the US, they fall under the authority of the Commodity Futures Trading Commission, whereas France’s Autorité Nationale des Jeux categorizes them as unlicensed gambling.

Recent remarks from Andrew Lyman, Gibraltar’s gambling commissioner, clarified that various platforms operate under different models, meaning they may not all fit into a single, established regulatory framework. He also suggested the possibility that Gibraltar could develop a bespoke regulatory regime for prediction markets, similar to the approach being explored in Malta.

Both Gibraltar and Malta are highly respected regulators with extensive experience, and they are adopting a pragmatic and realistic perspective. The global appetite for prediction markets is growing, and anyone involved in iGaming understands that clarity is preferable to confusion.

However, so far, they do not have much support.

In the iGaming industry, there is a worldwide trend towards stricter regulations. Across Europe and Latin America, authorities are more inclined to introduce tighter rules rather than loosen them, particularly concerning sportsbook advertising or online casino bonuses.

Attitudes towards prediction markets are even more stringent. While only a few countries have officially regulated them, there are many more that have opted for prohibition, such as Brazil, which outlawed prediction markets and promptly blocked 27 related websites.

These restrictive measures, however, place regulators out of sync with public sentiment. Players enjoy the wide variety of available bets and the underlying mathematics; in genuine prediction market products, odds are determined by market dynamics, and each bet functions as a contract between two parties, with the platform simply facilitating the transaction. The platform then collects a commission, eliminating the need to incorporate a house edge into the odds, thereby benefiting both players and operators.

Beyond their undeniable appeal, prediction markets are also gaining cultural credibility through partnerships with professional sports leagues. ADI Predictstreet serves as the official FIFA prediction market partner for the upcoming World Cup, and in the US, where prediction markets are classified as financial instruments, the NHL has entered multi-year agreements with both Kalshi and Polymarket. Additionally, Polymarket has secured a deal with MLS.

In the long term, prediction markets may follow a similar path to legalization as online casinos and sportsbooks once did: initial resistance, followed eventually by a shift towards protecting players, shrinking the black market, and generating tax revenue. Countries like Germany, the Netherlands, Colombia, and Brazil are just a few examples from a lengthy list.

Moreover, jurisdictions such as Gibraltar and Malta that embrace this inevitable development early on could reap substantial benefits. As pioneers, Gibraltar and Malta will have the chance to position themselves as leaders in a sector already valued in the billions, and one that is expected to continue expanding in the future.