Exchange-Based Betting in the UK ( Betfair)
Exchange-based betting first gained widespread popularity in the UK through Betfair, which introduced a peer-to-peer marketplace where users bet against one another instead of against a bookmaker. This exchange model became the foundation for today's prediction markets by allowing prices to be determined by market participants rather than a Sportsbook setting the odds.
How Prominent National Bodies (U.S., UK, EU) Classify Prediction Markets
There is no universal classification for prediction markets. In the U.S., platforms like Kalshi are regulated as event contract exchanges under the CFTC, while other jurisdictions may classify similar products as gambling or financial instruments depending on their regulatory framework. This lack of consistency is one of the industry's biggest challenges.
What Type of Licensing Is Required to Operate a Prediction Market
Licensing requirements depend on the jurisdiction being served. Operators must obtain the appropriate regulatory approval for each target market, for example, CFTC registration in the U.S., Gambling Commission licensing in the UK, or applicable gambling and financial licenses across EU member states. Operators cannot rely on a single license to serve every market.
Uncertainty Associated with the Offshore Route
Incorporating offshore does not automatically provide legal access to every market. Even if a company is established in a permissive jurisdiction, it must still comply with local regulations where users are located, including geofencing restricted countries and maintaining compliance policies. Operating offshore without doing so creates significant legal and regulatory risk.
First Prediction Market Regulatory Framework in Europe
Gibraltar became the first European jurisdiction to establish a dedicated regulatory framework specifically for prediction markets, marking a major milestone for the industry. Rather than forcing prediction markets into existing gambling or financial regulations, Gibraltar created a bespoke licensing regime tailored to the unique nature of these platforms. As a result, WagerWire received approval in principle to operate under this groundbreaking framework, positioning the company as one of the first prediction market operators to launch under Europe's purpose-built regulatory system. The approval not only validates WagerWire's business model but also places the company at the forefront of the global expansion of regulated prediction markets.
Conclusion
Prediction markets are expanding rapidly, but long-term growth will depend on regulatory clarity. The combination of clearer licensing pathways and purpose-built regulatory frameworks, such as Gibraltar's, could make it easier for operators to expand globally while providing greater confidence for both businesses and consumers.
