The South African Bookmakers Association (SABA) is advocating for a ban on prediction markets within the country due to concerns regarding the integrity of sports betting. In a recent press release, SABA expressed alarm at the rise of unregulated prediction market platforms.
This announcement refers to a News24 article dated July 19, which reported that more than R700,000 (approximately $41,750) had been wagered on the identity of Johannesburg's next mayor using the platform Polymarket. SABA asserts that these prediction market platforms should be treated identically to betting exchanges, meaning that operators would not be able to bypass gambling regulations by rebranding their offerings as forecasting markets.
According to the association, any consideration of prediction markets should follow a thorough examination of current gambling and financial market legislation, including measures related to anti-money laundering (AML) and frameworks for integrity monitoring. Until a regulatory framework specifically addressing prediction markets is established, SABA believes these markets should be classified as illegal.
Highlighting integrity issues, SABA referenced a study from April by the International Federation of Horseracing Authorities (IFHA), which indicated that prediction markets pose a significant risk to sports integrity by permitting bettors to profit from underperformance. SABA supports this conclusion, noting, "These concerns become particularly acute when prediction markets extend beyond sports into political elections, legislative decisions, public appointments, regulatory outcomes, and financial events."
The association warns that South Africa currently lacks the monitoring capacity to identify manipulation, creating a substantial regulatory blind spot.
SABA also voiced its apprehension regarding the North West Gambling Board's provision of a betting exchange license, arguing that existing laws do not explicitly sanction such licenses. It views prediction markets as akin to betting exchanges since they facilitate peer-to-peer betting without taking on betting risk themselves. SABA stated, "There is a legitimate question as to whether existing gambling legislation authorises such activities at all."
Moreover, SABA identified increased AML risks associated with prediction markets, citing the large volume of peer-to-peer transactions and the complexities of operating across multiple jurisdictions. The association pointed out that offshore prediction market operators may pose challenges for South African authorities in obtaining transaction information or enforcing compliance with regulations.
Additionally, prediction markets have not been subjected to the same responsible gambling norms that regulate traditional operators, lacking necessary systems for self-exclusion and restrictions on advertising. The tax implications are another concern, with SABA emphasizing that without a specific framework, significant gambling-related revenue exits South Africa without contributing to tax income or aiding local economic growth.
SABA concluded that until comprehensive legislation addressing licensing, integrity monitoring, consumer protection, AML compliance, and taxation is implemented by South African gambling regulators, prediction markets should be classified as exchange-style betting products that operate outside the current legal framework.
