The World Lottery Association (WLA) has issued a call for action for prediction markets to be aligned with the high social responsibility requirements imposed on the gambling sector.
The WLA is an international organisation whose membership base includes more than 150 state-authorised lotteries. Because of that, it is safe to assume that its voice carries weight and is heard far and wide whenever a statement is made, especially when it comes to such a controversial topic like prediction markets.
And calling your position paper “Prediction Markets: Unlicensed Betting by Another Name” makes it clear where the WLA stands on the matter.
In the paper, the organisation outlines that both gaming and financial market regulators should ‘urgently’ mobilise to close any regulatory gaps that allow prediction markets to fall outside of the licensing, social tax and consumer protection structures found in the licensed betting sector.
“Any product that offers a financial return contingent on a sporting or event outcome is a bet, and must be regulated accordingly, whatever label the operator chooses to attach to it,” the WLA has sternly stated.
“Jurisdictions which choose to classify such offerings as financial products, nonetheless require the application of safeguards and constraints equivalent to those applicable to gambling, given the comparable consumer-protection, integrity and harm-prevention risks involved.”
Prediction markets are mostly popular in the US. The controversy for the rest of the world stems from the fact that they are treated as investment instruments there, governed by the national financial regulator, despite offering wagers on the outcome of sporting events.
In Europe and Oceania, many gambling regulators have declared such offers a gambling product, essentially making them illegal unless they acquire a gambling licence. Cracks have shown, however, with Gibraltar recently becoming the first EU market to officially licence a prediction market platform.
In the UK, similar offers have long existed and are known as betting exchanges. They are, however, regulated by the Gambling Commission, which has remained steadfast that prediction markets will also have to fall under its remit if they choose to tackle the domestic market.
The WLA is clearly advocating for the removal of any doubts whether such offers constitute betting or not, signalling that the friction between prediction markets and the regulated gambling sector will only intensify further going forward.