The South African Bookmakers Association (SABA) has made a formal plea for a ban on prediction markets within the country, citing serious concerns about the integrity of sporting events.
In a statement released on Monday, SABA expressed its apprehension regarding the "emergence and growth" of unregulated prediction market platforms in South Africa.
The association referenced a News24 article dated 19 July, which reported that over R700,000 (approximately $41,750) had been wagered on who would become the next mayor of Johannesburg through the platform known as Polymarket.
SABA suggests that these platforms should be classified under the same regulatory standards that apply to betting exchanges. The association asserts that operators should not evade gambling regulations by simply labeling their products as forecasting markets.
SABA emphasizes that a thorough review of gambling and financial market legislation is necessary before prediction markets can be considered. This review should also encompass aspects such as anti-money laundering (AML) obligations and integrity monitoring frameworks. Until a specific regulatory framework is established, SABA argues that prediction markets should be treated as part of the illegal market.
Integrity concerns are at the forefront of SABA's argument. The association highlighted an April study from the International Federation of Horseracing Authorities (IFHA) which described prediction markets as a "significant and emerging challenge for sports integrity." The IFHA's report claimed that predictions could allow bettors to profit from underperformance, thus increasing risks to integrity.
Echoing these fears, SABA remarked, “These concerns become particularly acute when prediction markets extend beyond sports into political elections, legislative decisions, public appointments, regulatory outcomes and financial events.” SABA believes that South Africa currently lacks the monitoring capability to detect any manipulation, leading to a considerable regulatory blind spot.
Concerns about the North West Gambling Board's issuance of a betting exchange license were also noted by SABA, which stated that existing legislation does not explicitly allow for such licenses. SABA argues that prediction markets function similarly to betting exchanges, as they do not accept betting risk themselves but instead facilitate peer-to-peer betting.
SABA raised questions about the legal authorization of these activities under current gambling legislation. The association pointed out additional issues, citing heightened AML risks due to the large number of peer-to-peer transactions across multiple jurisdictions involved in prediction markets. With offshore operators entering the arena, South African authorities may struggle to collect transactional information or enforce compliance.
SABA also highlighted that prediction markets have not been subject to the same responsible gambling obligations as traditional operators, which include systems for self-exclusion and advertising restrictions.
The association warned that without a dedicated framework, significant gambling-related revenues are likely to leave South Africa without contributing meaningfully to tax revenues or local economic development. They concluded, "Until South African Gambling Regulators have enacted a comprehensive legal framework addressing licensing, integrity monitoring, consumer protection, anti-money laundering compliance, and taxation, SABA submits that betting prediction markets cannot and should not be authorized to operate in South Africa and should be regarded as exchange-style betting products outside the current legislative framework."
