PREDICTION MARKETS
Government's approach and initiative to regulating this activity according to its actual known risks rather than by analogy to financial services or traditional gambling. Gibraltar Internationally Many prospective operators are less concerned with whether prediction markets should theoretically be regulated as gambling or financial services, and more concerned with obtaining regulatory certainty. The commercial challenge in several jurisdictions has been the absence of a clear answer. Gibraltar's framework seeks to address that uncertainty directly by creating a discrete legal category with its own dedicated rulebook. The potential and significance of the new prediction markets framework is easier to see against the international backdrop grasping how best to regulate predication market business and consumers. In the United States, event contracts have been drawn into the derivatives framework supervised by the Commodity Futures Trading Commission, an approach that brings the heft of financial regulation but also its cost, complexity and definitional friction. In addition, state gambling regulators are also, it is reported, taking enforcement action under state law with mixed and conflicting court decisions. Tax treatment of the activity in the US to date appears to remain unresolved. Elsewhere, operators have been left to guess whether a national gambling regulator or a financial regulator, or both, or neither, will assert jurisdiction. Gibraltar's answer is novel: it names the activity, gives it a dedicated rulebook, and supervises it through a regulator with decades of experience in remote, technology- enabled markets.
For operators currently offshore, operating under ambiguous status, or seeking a credible internationally recognized base, the combination on offer, bespoke legal characterization, experienced regulator, and explicit accommodation of digital-asset settlement, is a rare one. It is not, however, a soft option. The substantive-presence requirement, the fit-and- proper threshold and the demanding contract- approval and market-integrity obligations mean that the price of certainty is genuine scrutiny. Whether other jurisdictions follow the same route or reach for their existing toolkits, Gibraltar has set a benchmark against which those choices will now be measured. Conclusion Gibraltar's decision to legislate a dedicated Prediction Markets framework reflects a simple but consequential conclusion: prediction markets are their own thing. They are not bets, they are not lotteries, and they are not financial instruments. Having reviewed and advised on several regulatory models internationally over 20 years, it is difficult to identify another framework that addresses prediction markets so directly on their own terms. Whether the Regulations ultimately becomes a template for other jurisdictions remains to be seen, but it undoubtedly provides operators, investors and advisers with something the sector has often lacked: a clear legal classification, a dedicated authorization route and a regulator prepared to supervise the activity according to its actual known risks.
STEVEN CAETANO Partner, ISOLAS LLP For information contact steven.caetano@isolas.gi +35020078363
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IMGL MAGAZINE | SEPTEMBER 2026
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