The World Lottery Association (WLA) has released a report stating that prediction markets, which have seen rapid growth in transaction volume in recent years, are disguised as financial products but are essentially no different from betting, constituting "unlicensed gambling" and posing risks to sports integrity, consumer protection, and the betting industry ecosystem. The WLA is urging urgent coordination among gaming and financial regulators to close regulatory loopholes.
According to the WLA report, transaction volumes in prediction markets have surged from less than US$100 million per month in early 2024 to over US$13 billion per month by the end of last year, reaching US$26 billion in January this year.
Currently, an estimated 90 percent or more of the current volume is driven by sports and other event betting. Industry projections indicate that the market size will reach over US$1 trillion by 2030.
The report notes that prediction markets exploit regulatory loopholes by presenting themselves as financial tools—referring to bets as “contracts” and participants as “traders”—thereby attempting to bypass existing betting regulations and reshape public perception. However, the WLA stresses that such rebranding does not alter their underlying nature as gambling products, and it firmly opposes their operation outside proper regulatory oversight.
The Association highlights multiple risks associated with prediction markets, including threats to sports integrity and match-fixing, consumer protection, unfair play, and national security. By linking monetary returns to sensitive political, security, and societal outcomes, these platforms raise distinct and serious risks in the areas of financial crime, national security, and public order.
Moreover, the lack of regulation in prediction markets allows unscrupulous individuals to profit by manipulating match results. The platforms impose no age or betting restrictions on participants, also failing to provide a regulated betting service. Conversely, licensed betting organizations typically bear the costs of compliance, taxes, and social welfare, but the prediction market remains uninvolved, thus hindering competition within the gambling industry.
The WLA reiterates that any product offering financial returns contingent on the outcome of an event should be classified as gambling and must be regulated accordingly, including licensing, age verification, self-exclusion mechanisms, anti-money laundering and counter-terrorist financing controls, suspicious transaction reporting, and responsible gambling measures.
WLA stated that when prediction markets engage both financial and gambling services, both sets of safeguards must apply. It calls for urgent alignment between gambling and financial market regulators to close loopholes and ensure prediction markets are subject to the same licensing, integrity, return to society and consumer protection standards as betting.
