Gibraltar will become first jurisdiction in the world to launch a regulatory regime solely covering the prediction markets sector.

The British Overseas Territory has already licensed two prediction platforms, ADI Predictstreet and Wire Markets, the former under a betting intermediary licence while the latter has been ‘approved in principle’.

These two companies will now be regulated under Gibraltar’s new predictions regime and the licence this includes, once the government gets the standalone framework in place.

The framework will be overseen by a dedicated supervisory authority, similar to the role of the Gambling Commissioner overseeing Gibraltar’s regulated gambling market.

Nigel Feetham KC MP, Gibraltar’s Minister for Justice, Trade and Industry, said: “Gibraltar’s approach is to regulate innovation responsibly by providing a clear regulatory framework for operators that wish to conduct prediction market activities under this regime, where it is the appropriate regulatory framework for their business. 

“The focus is not on labels, but on ensuring that the chosen framework is capable of effective supervision and robust standards of market integrity, transparency, participant protection and financial crime prevention.”

The Gibraltar predictions market regulatory framework will cover the following:

• Market integrity
• Participant protections
• Contract approvals
• Surveillance and anti-money laundering
• Compliance and a sanctions regime
• Use of digital assets, including stablecoins, for funding and settlement

The inclusion of the latter may be particularly important as crypto has been a significant part of the predictions market operation globally.

Gibraltar-licensed ADI Predictstreet is built on the ADI Chain blockchain run by UAE tech firm ADI Foundation.

Polymarket, one of the biggest predictions platforms in the world, uses the USDC stablecoin and is built on the Polygon blockchain.

The issue of market integrity is also an important one. Predictions have faced scrutiny over this, particularly Polymarket, due to the concerns around insider trading around the markets it offers on politics and military conflicts.

Gibraltar throws doors open to predictions

Predictions are a touchy topic globally, with many national regulators – France, Belgium, Singapore, Portugal, Argentina and Italy to name a few – seeing the platforms as illegal gambling, and blocking them as such. 

The US is the birthplace of the modern online predictions market as the home nation of Kalshi and Polymarket, the two biggest companies in the space with respective valuations of $22bn and $15bn.

The regulatory situation is not exactly clear there either though.

The federal Commodity Futures Trading Commission (CFTC) is firmly on the side of prediction platforms, viewing them as legitimate financial products, but regulators in states like Nevada, Connecticut and Arizona, among others, have been pushing back.

The CFTC is now involved in litigation with nine states over predictions regulation – Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island and Wisconsin.

Back in the Mediterranean, Gibraltar has firmly set itself up in the prediction markets camp.

This comes amid a wider revamp of the territory’s gambling framework, with the government pushing through a new gambling bill this year to modernise its regulatory framework.

The government was partly motivated by the new gambling tax regime in the UK, which the majority of Gibraltar-based firms count as a core market. Some 25% of the territory’s GDP comes from gambling, and the UK market is central to this.

With the industry’s changing dynamics in mind, Gibraltar clearly sees predictions as the future, or at least part of the future.

Travis Geiger, co-founder of WagerWire, the California company behind Gibraltar’s second licensed predictions firm, Wire Markets, described the new regime as a “landmark moment for the prediction market industry”. 

“By focusing on market integrity, innovation, and responsible oversight, Gibraltar has established a thoughtful framework that gives operators the clarity they need to build for the long term,” he said.

“We’re incredibly proud to have worked alongside HM Government of Gibraltar throughout this process and excited for what comes next.”