After months of preparations, the Gibraltar government has officially launched a regulatory framework for prediction markets, with two licenses already awarded. Announced on Monday through the Gibraltar Gazette by the Ministry for Justice, Trade and Industry under Minister Nigel Feetham, this initiative is part of the new Gibraltar Gambling Act 2025.
The regulations aim to implement an "activity-based and risk-based approach" to the regulation of prediction markets, addressing various risks including market integrity, participant protection, financial crime prevention, and safeguarding Gibraltar's reputation. Additionally, the framework acknowledges the value of these markets in aggregating information and facilitating price discovery.
Minister Feetham emphasized the collaborative nature of this framework, which is the result of extensive discussions with industry professionals and potential investors. He remarked, "This framework is the product of extensive engagement with industry professionals, prospective operators and investors over recent months. It reflects Gibraltar’s collaborative approach to regulation and demonstrates that innovation and robust regulatory standards can go hand in hand." He further noted that numerous globally recognized businesses have expressed significant interest in applying for licenses under the new framework.
To ensure effective oversight, an independent supervisory panel has been created. Feetham highlighted that this authority possesses experience in managing remote, digitally-enabled markets and regulating complex environments.
The initial hints of Gibraltar's move into prediction markets were shared by Feetham in April during a parliamentary session. At that time, he mentioned that ADI Predictstreet was the recipient of the first license, though it was issued under the previous legislation as the new Gambling Act had yet to be fully enacted.
The published 24-page regulatory document outlines essential rules for operators of prediction markets. All event contracts must receive approval and certification from the Gambling Authority. Additionally, these contracts must be clear, objectively settlable, impervious to manipulation, and align with regulatory goals. Operators are required to establish systems to prevent market manipulation, insider trading, and mishandling of confidential information. Furthermore, the authority retains the power to restrict or prohibit contracts deemed inappropriate or not in the public interest, including those linked to criminal activities, death, serious injury, terrorism, or armed conflicts.
The first licensee for prediction markets, ADI, was categorized under a "betting intermediary" license. The new legislation recognizes prediction market activities as a distinct category, complete with its own authorization, operational requirements, and supervisory guidelines. Feetham noted that this development illustrates Gibraltar's agility in adapting to changes, especially following tax increases in the UK that have impacted its gaming sector catering primarily to the UK market.
Feetham declared, "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." Meanwhile, US betting marketplace WagerWire is expected to become the second license holder in Gibraltar after receiving approval to launch in June.
Travis Geiger, co-founder of WagerWire, indicated that the California-based platform is gearing up to launch a B2B and B2C prediction markets product ahead of the NFL preseason and the start of international football in August. He noted Gibraltar’s reputation as a gaming leader, expressing belief that the framework could serve as a model for other jurisdictions.
Regarding the ongoing global discourse on the classification of prediction markets, Feetham recognized that there is a lack of "settled consensus" on how these markets should be categorized. The ongoing debates between financial and gambling regulators in the US reflect this uncertainty, particularly as the vertical gains momentum through operators like Kalshi and Polymarket.
He remarked, "Internationally, there remains no settled consensus as to how prediction markets should be characterised. Different jurisdictions may view them differently. Gibraltar’s framework therefore provides an additional regulatory option by establishing a dedicated regime."
Feetham asserted that the rapid evolution of the prediction market sector necessitates a clear, adaptable framework that upholds high standards of market integrity, participant protection, and regulatory oversight. Recently, the EU financial regulator ESMA reiterated its stance on specific prediction market contracts, maintaining strict controls. Meanwhile, several European gambling regulators have taken a similar approach, blocking leading operators like Polymarket and Kalshi from their jurisdictions amidst consumer protection concerns.
Contrastingly, Feetham pointed out that Gibraltar's framework is designed with safeguards reflecting the unique characteristics of exchange-based markets. These measures encompass aspects related to market manipulation, conflicts of interest, client asset protection, anti-money laundering, sanctions compliance, and planning for financial resources and wind-down processes.
