The South African Bookmakers Association (SABA) is advocating for a ban on prediction markets in the country due to integrity issues in sports.
In a press release published on Monday, SABA expressed alarm regarding the rise of unregulated prediction market platforms in South Africa. The release cited a News24 article dated July 19, revealing that over R700,000 (approximately $41,750) had been wagered on the next mayor of Johannesburg using Polymarket, a prediction market platform.
SABA argued that prediction market platforms should be subject to the same regulatory standards as betting exchanges, asserting that operators should not evade gambling regulations by branding their offerings as forecasting markets. The association stated that prediction markets should only be considered after a thorough examination of existing gambling and financial market laws, including anti-money laundering (AML) responsibilities and integrity oversight mechanisms.
Until there is a specific regulatory framework for prediction markets, SABA contended that these platforms should be treated as part of the illegal gambling market.
The integrity of sports was a central focus in SABA's concerns. They referenced an April study from the International Federation of Horseracing Authorities (IFHA), which identified prediction markets as a growing challenge to sports integrity. According to the IFHA report, these markets allow bettors to earn profits from athletes' underperformance, which could raise integrity risks within sports.
SABA noted, "These concerns become particularly acute when prediction markets extend beyond sports into political elections, legislative decisions, public appointments, regulatory outcomes, and financial events.” They believe South Africa currently lacks the capacity to effectively monitor and detect manipulation, resulting in a significant regulation gap.
SABA also expressed previously raised concerns regarding the North West Gambling Board’s issuance of a betting exchange license, pointing out that current legislation does not explicitly authorize such licenses. SABA views prediction markets as similar to betting exchanges, which do not take on betting risk themselves and facilitate peer-to-peer betting. They articulated, "There is a legitimate question as to whether existing gambling legislation authorizes such activities at all."
Other issues flagged by the association include increased AML risks associated with large-scale peer-to-peer transactions across various jurisdictions. They emphasized that if offshore prediction market operators are involved, South African authorities might struggle to access transactional data or enforce compliance.
Additionally, SABA highlighted that prediction markets have not been subjected to the responsible gambling obligations that traditional operators must follow, such as self-exclusion systems and advertising regulations.
The tax implications are also a concern for SABA. They noted that without a specific framework, substantial gambling-related revenues could exit South Africa without providing significant tax income or benefiting local economic development.
SABA concluded by asserting that until South African gambling regulators create a full legal structure addressing licensing, integrity monitoring, consumer protection, AML compliance, and taxation, prediction markets should not be permitted in South Africa. They argued that these markets should be regarded as exchange-style betting products that fall outside the current legal framework.
