Prediction Markets: Operators and Regulators Eye a New Betting Vertical

The iGaming industry is taking a fresh look at prediction markets, fueled by the recent rise of platforms such as Kalshi and Polymarket. While the concept is not new—betting exchanges have long enabled peer-to-peer wagering on event outcomes—the mainstream traction gained by these platforms has revived questions about whether prediction markets represent a genuine new vertical or simply a repackaging of existing mechanics.

Kalshi first demonstrated that event-based contracts could transition from academic experiments to a mainstream consumer offering in the US, while Polymarket revealed a global appetite for wagering on elections, economic data, and sporting events. At their core, prediction markets operate much like betting exchanges: buyers and sellers with opposing views interact through an operator that acts as intermediary rather than market maker. The difference lies largely in perception and positioning.

This renewed interest has drawn regulatory scrutiny, particularly in jurisdictions such as Gibraltar. Rather than seeking to prohibit prediction markets, Gibraltar’s approach has been to explore how to regulate them responsibly. As the jurisdiction’s officials have indicated, innovation and regulation need not be adversaries.

Who uses prediction markets? Industry observers describe the audience as people who enjoy expressing opinions with money attached—whether on election outcomes, inflation figures, World Cup results, or Oscar winners. This demographic overlaps with but is distinct from traditional sports bettors.

Industry analysts suggest prediction markets are unlikely to replace existing betting products, similar to how betting exchanges did not replace sportsbooks. Instead, they are expected to find their own audience and coexist alongside traditional offerings. Prediction markets are not aiming to reinvent betting itself, but rather to reinvent how people trade confidence in the future. The message for sportsbook operators: pay attention, but do not expect a wholesale shift.