World Lottery Association warns prediction markets are bypassing gambling rules

The World Lottery Association has urged gambling and financial market regulators to close gaps around prediction markets, arguing that products offering financial returns on sports, lottery, or other event outcomes should be treated as betting regardless of how operators describe them.

In its Position Paper: Prediction Markets: Unlicensed Betting by Another Name — Threats to Sports Integrity, Consumer Protection, and the Lottery and Betting Sector, the WLA says prediction markets have expanded rapidly while operating largely outside licensing and consumer protection rules applied to lotteries and betting operators.

Global prediction market transaction volumes rose from less than $100 million per month in early 2024 to more than $13 billion per month by late 2025, before reaching $26 billion in January 2026, according to data quoted by the association.

Figures estimate that at least 90% of current volume is driven by sports and other event contracts. Industry projections cited in the paper indicate the market could exceed $1 trillion by 2030.

The WLA argues that prediction markets  reframe betting activity by describing bets as “contracts” and users as “traders.” However, the association says this does not change the substance of the activity where payment depends on the outcome of a sporting or other event.

The paper calls for “a functional, substance-based regulatory test”, under which any product offering a financial return tied to an event outcome should be regulated as a bet. It also asks gambling regulators to determine the legal status of prediction market products directly.

Where jurisdictions classify such products as financial instruments, the WLA says equivalent gambling safeguards should still apply because the risks are comparable. These include licensing, age verification, self-exclusion, spending limits, anti-money laundering and counter-terrorist financing controls, suspicious transaction reporting, insider trading restrictions, and responsible gambling support.

The association also warned that unlicensed sports-event and lottery-based contracts may breach local gaming laws and operate outside the framework of the Macolin Convention on the Manipulation of Sports Competitions. The paper incorporates the views of United Lotteries for Integrity in Sports on sports integrity issues.

According to the WLA, prediction markets create match-fixing risks when they lack monitoring systems, suspicious transaction reporting, and insider trading prohibitions. It said such gaps could allow corrupt actors to profit from manipulated outcomes.

The paper also raises concerns over consumer protection and public order, particularly where financial returns are linked to political, security, or other sensitive societal outcomes. The WLA said unregulated platforms may also allow minors or vulnerable users to participate without the checks required of licensed betting operators.

The association said the current structure creates uneven competition, as licensed lotteries and betting operators bear compliance, tax, and public contribution costs while unregulated prediction market operators compete for the same customers without those obligations.

The WLA called on regulators, governments, sports bodies, and industry stakeholders to act on unlicensed operation, sports integrity risks, consumer protection failures, and uneven competition before the sector expands further.