The Gibraltar government has officially launched a comprehensive regulatory framework for prediction markets, following months of preparation and after granting two licenses. This announcement was made public in the Gibraltar Gazette on Monday by the Ministry for Justice, Trade and Industry, overseen by Minister Nigel Feetham. The regulations are part of the new Gibraltar Gambling Act 2025.
The established framework adopts an "activity-based and risk-based approach" to regulation, focusing on potential risks such as market integrity, participant protection, prevention of financial crime, and safeguarding Gibraltar's reputation. Moreover, it recognizes the role that prediction markets can play in gathering information and facilitating price discovery.
Minister Feetham expressed that the framework results from extensive dialogues with industry stakeholders and illustrates Gibraltar's collaborative regulatory approach. He emphasized that the balance of innovation and stringent regulatory standards is achievable. There has been noticeable interest from numerous potential applicants, including globally recognized companies.
To oversee the framework's implementation, an independent supervisory panel has been appointed. This panel has experience with remote technology markets and complex digital environments, as noted by Feetham.
Hints towards this regulatory move surfaced in April when Feetham mentioned in a parliamentary session that the first license had been granted to ADI Predictstreet. However, the license fell under prior legislation due to the new Gambling Act not being in effect at that time.
The 24-page regulatory document stipulates several essential guidelines for prediction market operators. Each event contract must be approved and certified by the Gambling Authority and must be clear, capable of objective settlement, and resistant to manipulation while aligned with regulatory objectives. Operators are required to implement their own systems to mitigate market manipulation, insider trading, or unauthorized use of confidential information.
The authority maintains discretion to limit or ban certain prediction market contracts if considered unsuitable or against public interest. Contracts involving criminal activities, death, serious injury, terrorism, or armed conflict are explicitly banned.
Gibraltar's initial prediction market licenses include ADI's, which was categorized under a "betting intermediary" license. The new legislation, however, classifies prediction market activities as a separate statutory category, complete with unique authorization and supervision requirements.
Feetham indicated that this move highlights Gibraltar's adaptability, particularly in light of gambling tax increases in the UK that posed threats to its gaming sector catering mainly to the UK market. He stated, "Today, we have delivered on that commitment with the publication of a bespoke regulatory regime for prediction markets, the first dedicated framework of its kind anywhere in the world."
WagerWire, a US-based betting marketplace, is poised to secure the second license in Gibraltar after receiving approval to launch in June. Co-founder Travis Geiger announced plans to introduce a B2B and B2C prediction markets product ahead of the NFL preseason and the onset of international football in August. He praised Gibraltar's reputation as a gaming hub and predicted the framework could serve as a model for other jurisdictions.
"I think this is the beginning of the end of the wild west and the taming of the frontier," Geiger remarked. He believes Gibraltar’s initiative sets a standard with its new regulatory rules, indicating it will influence other countries.
Feetham acknowledged the absence of a global consensus on the classification of prediction markets. U.S. financial and gambling regulators have faced challenges in determining whether these markets should be treated as gambling or financial in nature. He asserted that Gibraltar's framework offers an option by creating a dedicated regime amidst this confusion.
"The prediction market sector is evolving rapidly. These regulations provide a clear, adaptable framework capable of supporting responsible innovation while maintaining high standards of market integrity," Feetham added.
Recently, the EU financial regulator ESMA reaffirmed its stance on certain prediction market contracts under its jurisdiction, while various gambling regulators across Europe have adopted restrictive measures against significant operators like Polymarket and Kalshi. A coalition of gambling regulators from Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, and Spain has expressed concerns about consumer risks in the context of unregulated prediction markets. These regulators underscored issues like a lack of player safeguarding and protective measures.
Even so, Feetham assured that Gibraltar's framework includes essential safeguards reflecting the dynamics of exchange markets. This includes measures against market manipulation, conflicts of interest, and rules ensuring participant protection and compliance with anti-money laundering standards.
