The South African Bookmakers Association (SABA) has officially called for a ban on prediction markets, citing concerns about the integrity of sports. In a statement released on Monday, SABA expressed alarm over the rapid rise of unregulated prediction market platforms in South Africa.
The association's statement referenced a July 19 article from News24, which reported that over R700,000 (approximately $41,750) had been wagered on the outcome of the next mayor of Johannesburg through the platform Polymarket.
SABA insists that prediction market platforms should align with the same regulatory standards that govern betting exchanges. They argue that operators should not evade gambling regulations simply by branding their offerings as forecasting markets.
SABA further stated that comprehensive reviews of gambling and financial market legislation, along with considerations for anti-money laundering (AML) requirements and integrity monitoring frameworks, must precede any official recognition of prediction markets.
Until such a framework is established, SABA believes these markets should be classified as part of the illegal gambling sector.
Addressing integrity concerns, SABA highlighted an April report from the International Federation of Horseracing Authorities (IFHA), which identified prediction markets as a considerable and emerging threat to sports integrity. The IFHA findings suggested that these prediction markets could enable bettors to profit from the failures of athletes and teams, thereby increasing risks to integrity.
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," emphasizing South Africa's insufficient monitoring capabilities to identify manipulation, which creates "a substantial regulatory blind spot."
In regard to the North West Gambling Board's provision of a betting exchange license, SABA previously raised alarms, arguing that existing legislation does not explicitly allow such licenses. They argue prediction markets and betting exchanges operate in similar ways by facilitating peer-to-peer betting without assuming betting risk themselves.
SABA remarked, "There is a legitimate question as to whether existing gambling legislation authorises such activities at all."
The association also pointed out the increased AML risks inherent in prediction markets, which handle substantial peer-to-peer transactions across various jurisdictions. They claimed that when offshore operators are involved, South African authorities might struggle to obtain transaction data or enforce compliance requirements.
Additionally, SABA noted that prediction markets do not face the same responsible gambling stipulations as traditional gambling operators, such as self-exclusion measures and marketing restrictions. They also raised concerns about taxation, stating that without a proper framework, significant gambling revenues would exit South Africa without contributing to local economic development.
SABA warned, "Until South African Gambling Regulators enact a comprehensive legal framework addressing licensing, integrity monitoring, consumer protection, anti-money laundering compliance and taxation, prediction markets cannot and should not be authorized to operate in South Africa and should be categorized as exchange-style betting products that fall outside the current legislative scope."
