Racing spotlights the prediction markets

The Anti-Illegal Betting and Related Crime dispatch for April dispatch is out, and it ‘highlights the similarity between prediction markets and betting exchanges within racing.’

‘In viewing the prediction of markets as a significant and emerging challenge for sports integrity, its participants who bet against one another that creates integrity risks, and must be managed.’

‘Prediction markets have existed for decades, and have surged in the past five years due to rapid expansion of financial market technology and the large volume of transactions they handle.’

‘In fact, prediction markets are platforms where one can bet on the outcome of future events by buying and selling shares in the outcomes and then forecasting the likelihood of events.’

‘These markets represent a re-packaging of sports betting under a different regulatory system, with pricing and integrity resembling existing wagering systems, but different legal framing.’

‘For policymakers and racing, the critical task is to prevent ‘regulatory arbitrage’ that undermines consumer protection, betting market integrity, and the financial sustainability of racing.’

‘There’s danger that prediction markets and sportsbooks will converge, with prediction markets excluding the integrity controls that have been inbuilt into regulated betting on racing.’

‘In also including other sports, this can result in regulatory arbitrage, with sportsbooks claiming to be prediction markets to avoid existing regulatory and financial commitments.’

It’s essential that regulators assess the prediction markets and decide if it constitutes betting under local laws and regulations, and inform consumers and government policy makers.’

‘Prediction markets are either legally authorised in each jurisdiction or they are not, and this must be made clear to consumers, governments, and to operators.’

‘Today the global betting industry faces friction from prediction markets because of the direct clash with gambling regulation and the enhanced threat to integrity in racing and other sports.’

‘The legal operating status of prediction markets has some clarity in the US, but not elsewhere in the world, but here’s disagreement in the US of the legal situation of prediction markets.’

‘However, in the rest of the world there has not been sufficient testing of the status in court, or public statements from gambling regulators.’

‘In Australia, the Australian Communications and Media Authority determines that prediction market platforms constitute illegal online gambling rather than financial trading tools.’

‘It concluded that these are under Australia’s gambling laws and cannot operate without an appropriate licence. It enforces this via ISP blocking on unlicensed offshore providers.’

‘Prediction markets are a significant and emerging challenge for sports integrity, with risks arising when markets enable profit from underperformance, losing, or player-controlled incidents.’

‘Cross-border access, pseudonymous accounts, and crypto funding can make suspicious prediction market-fuelled betting harder to investigate than in well-regulated betting markets.’

‘It’s essential that regulators assess the nature of prediction markets, and decide if it constitutes betting under local laws and regulations, and clearly inform consumers and policy makers.’