PREDICTION MARKETS
and objective settlement. Gibraltar concluded that a product straddling both worlds needed a rulebook that spoke both languages, and that a general gambling license could not.
which participants may enter into, trade or hold prediction market contracts; (c) operate systems for pricing, matching, clearing, settlement, reporting and market surveillance; or (d) undertake ancillary activities approved by the Authority. The breadth of the definition is one of the most significant features of the new regime. By defining a prediction market contract not merely by reference to the occurrence or non- occurrence of an event, but also by reference to any index, measure, statistic, result or outcome derived from that event, the Regulations deliberately cast a wide net. This allows the regime to accommodate a broad spectrum of products ranging from binary event contracts and election markets to more sophisticated index-based, performance-based and data-driven prediction products, without requiring constant legislative amendment as the sector evolves 6 . A recurring question is whether the new category signals an easier route to market. It does not. Part 2 of the Regulations establishes the licensing process, and it is a high barrier to entry. A person must not operate a prediction market in or from Gibraltar unless authorized and entered on the register, and only then does the exemption from the general prohibition in section 26 of the Gambling Act apply 7 . The Licensing Authority may grant a prediction markets authorization only if satisfied that the applicant meets the core conditions in Schedule 2, and in determining an application it must have regard to the regulatory objectives, in particular the need to protect participants, prevent financial crime, preserve market integrity and protect the reputation of Gibraltar 8 . The set of conditions in Schedule 2 is taken from the established approach for gaming regulation. The existing well established regulatory approach in Gibraltar is applied also for prediction market authorizations: i.e. the applicant and its controllers must be fit and proper, capable of effective supervision, and able to comply with the Regulations, and they must demonstrate adequate financial and non-
Why not financial services law either? If prediction markets look, in places, like trading venues, why not regulate them as financial services under the well- established and reputable Gibraltar Financial Services framework? The Regulations are careful to close off that reading too. A prediction market authorization is expressly not a license under Part 4 of the Gambling Act, and, more importantly, it only authorizes the holder to carry on prediction market activity and does not authorize the holder to carry on any other regulated activity under the Gambling Act 5 (see below). The Regulations borrow the supervisory language of financial markets, integrity, conflicts, safeguarding, wind- down, without asserting that prediction market contracts are financial instruments or that operators are carrying on investment business. Bringing these products within the scope of a securities or derivatives framework designed for a different purpose and, in many cases, a different customer base was not deemed appropriate by the Gibraltar legislature. Gibraltar's answer is to take the useful supervisory tools from the trading sector into a bespoke predictions framework, while leaving the legal characterization of the product firmly as a stand-alone category. The authorization itself and the authorization process An authorized operator may, subject to the Regulations and the conditions of its authorization, do one or more of the following: (a) facilitate the creation, listing and settlement of prediction market contracts; (b) provide a platform through
5 Prediction Market Regulations 2026, reg 6(3), reg 6(5) and reg 3(3) 6 A “prediction market contract” under the Regulations is defined as “a contract, arrangement or instrument the value, return, payment or settle- ment of which is determined by reference to: (a) the occurrence or non-occurrence of an event; or (b) the value of, or any change in the value of, an index, measure, statistic, result or outcome derived from or connected with such event” 7 Prediction Market Regulations 2026, regs 5 and 6 8 Prediction Market Regulations 2026, reg 8 and Schedule 2
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IMGL MAGAZINE | SEPTEMBER 2026
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