South African Bookmakers Association (SABA) is concerned about the emergence and growth of unregulated prediction market platforms that allow South African consumers to wager on political, economic, social, and sporting outcomes outside the existing gambling regulatory framework.

Recent reporting indicates that more than R700,000 was wagered on the selection of Johannesburg’s next mayor through the offshore prediction market platform Polymarket, despite the absence of South African regulatory oversight, licensing, taxation arrangements, responsible gambling controls, or integrity safeguards.

While prediction markets are often presented as innovative forecasting tools, their underlying mechanics are materially similar to peer-to-peer (“P2P”) betting exchanges. Both models enable individuals to bet against one another, while the platform facilitates matching and collects commissions or transaction fees rather than taking on betting risk itself.

SABA aligns with the conclusions of the International Federation of Horseracing Authorities (IFHA) and other international sporting integrity bodies that products enabling participants to profit from losing outcomes create elevated risks to sporting integrity, market manipulation, insider trading, corruption, money laundering, and consumer harm.

These concerns become particularly acute when prediction markets extend beyond sports into political elections, legislative decisions, public appointments, regulatory outcomes, and financial events.

Accordingly, SABA submits that:

1. Prediction markets are functionally analogous to betting exchanges and should not be permitted unless regulated accordingly.
   
2. South African gambling legislation does not expressly provide for the licensing of prediction market operators.
   
3. Licensing betting exchanges remains legally contentious and policy-sensitive in South Africa.
   
4. Prediction markets operating without a dedicated legislative framework create significant regulatory, integrity, and consumer protection risks.

To render to, for, and on behalf of members any services of mutual aid, while maintaining and promoting honorable practices among bookmakers and their stakeholders within the racing and wagering industry. A recent News24 report demonstrates that prediction market activity is already occurring in South Africa despite existing regulatory uncertainty.

Prediction markets allow participants to purchase positions on whether an event will occur, where the market price reflects a perceived probability of that outcome. Platforms such as Polymarket and Kalshi have expanded globally to facilitate speculation on:

• Elections
• Political appointments
• Legislative outcomes
• Economic indicators
• Regulatory decisions
• Corporate events
• International conflicts
• Sporting outcomes

Despite frequent descriptions as “information markets” or “forecasting markets,” prediction markets involve participants staking money on uncertain future contingencies for financial gain. Their essential characteristics therefore fall within the broader concept of gambling and betting.

SABA’s position is that prediction markets and betting exchanges are not fundamentally different products. For example, Betfair describes its exchange model as a marketplace where customers bet against one another rather than against a bookmaker. The exchange facilitates matching and collects commission (betfair.com).

Similarly, prediction markets function by matching opposing positions held by participants with differing views about future events. In both cases:

• The operator is not the counterparty to the wager;
• Participants assume risk against one another;
• Market prices are generated by participant activity;
• The operator earns revenue via commissions or transaction fees;
• Participants may profit from either the occurrence or non-occurrence of an event.

The distinction is largely one of branding rather than substance. Therefore, policy concerns applicable to betting exchanges apply equally to prediction markets. The IFHA has repeatedly highlighted the dangers associated with betting products that facilitate wagering on losing outcomes and micro-events. Integrity concerns include:

• Match-fixing
• Spot-fixing
• Insider manipulation
• Corruption of participants
• Criminal exploitation of betting markets
• Erosion of public confidence in sporting outcomes

These concerns arise because participants can profit directly from negative outcomes. Unlike traditional betting, where a bettor generally wagers on a positive outcome occurring, exchange-style products permit a participant to benefit from failure, underperformance or nonoccurrence. This creates a direct financial incentive to influence outcomes.

Prediction markets introduce additional integrity concerns not ordinarily present in sports betting. Where markets are offered on:

• Elections
• Cabinet appointments
• Municipal leadership positions
• Legislative votes
• Regulatory decisions
• Government contracts

Participants may have a financial incentive to influence democratic or governmental processes. The Johannesburg mayoral market illustrates how prediction markets can transform political events into speculative financial instruments. Unlike sports integrity frameworks, South Africa presently lacks any equivalent monitoring system capable of detecting or preventing manipulation linked to prediction market activity. This creates a substantial regulatory blind spot.

SABA has consistently maintained that peer-to-peer betting exchanges do not comfortably fit within existing statutory definitions of either:

• bookmakers, or
• totalisators.

The same reasoning applies to prediction markets. A platform that merely facilitates betting between members of the public does not “conduct the business of a bookmaker” in the traditional statutory sense because it is not itself a party to the wager. Prediction market operators similarly facilitate transactions between participants rather than assuming betting risk themselves. As a result, there is a legitimate question whether existing gambling legislation authorizes these activities at all.

SABA has previously expressed concerns regarding the Northwest Gambling Board’s issuance of licenses described as “Bookmaker Operator (Betting Exchange)” licenses. SABA’s position remains that:

• provincial regulators may only exercise powers specifically granted by legislation;
• existing legislation does not expressly authorise betting exchange licences; and
• an exchange model is fundamentally different from traditional bookmaking.

The emergence of prediction markets raises identical questions. If betting exchanges require dedicated legislative treatment, prediction markets require the same approach.

Prediction markets present heightened AML risks because they:

• facilitate large volumes of peer-to-peer transactions;
• enable rapid fund movement;
• allow offsetting positions;
• operate across multiple jurisdictions;
• frequently involve crypto-assets; and
• produce fragmented transactional records.

International regulators increasingly recognize that exchange-style products create complex money-laundering risks that may be more difficult to detect than traditional bookmaker transactions. Where offshore prediction market operators are involved, South African authorities may have limited practical access to transaction information and may struggle to enforce compliance obligations.

Unlike licensed South African bookmakers, offshore prediction market operators are not subject to:

• South African responsible gambling obligations;
• Self-exclusion systems;
• Advertising restrictions;
• Affordability controls;
• Customer dispute resolution mechanisms;
• Local taxation requirements; or
• National Responsible Gambling Programme contributions.

Consumers participating in these markets therefore enjoy significantly fewer protections than those available in regulated betting environments.

Prediction markets create major challenges for taxation authorities. Key issues include:

• Taxation of commissions;
• Gross gaming revenue calculations;
• Offshore settlements;
• Cryptocurrency transactions; and
• Cross-border profit extraction.

Without a dedicated framework, substantial gambling-related revenues leave South Africa without generating meaningful tax contributions or supporting local economic development.

SABA recommends that policymakers adopt the following principles:

1. Recognition of Functional Equivalence
   Prediction markets should be assessed as exchange-style betting products under the same regulatory standards applied to betting exchanges.
   
2. No Regulatory Arbitrage
   Operators should not be permitted to avoid gambling regulation by marketing products as “forecasting” or “information” markets.
   
3. Dedicated Legislative Review
   Prediction markets should only be considered following a comprehensive review of:
   • gambling legislation;
   • financial market legislation;
   • electoral legislation;
   • consumer protection requirements;
   • AML obligations; and
   • integrity monitoring frameworks.
     
4. Precautionary Approach
   Until a dedicated framework exists, prediction market operators should be treated as part of the illegal offshore market.
   
5. Integrity First
   Any future consideration must prioritize:
   • sporting integrity;
   • democratic integrity;
   • consumer protection;
   • anti-money laundering controls; and
   • public confidence in regulated gambling markets.

Conclusion

SABA supports the position advanced by the IFHA and other international integrity bodies that products enabling participants to profit from losing outcomes present heightened integrity risks. Prediction markets are, in substance, exchange betting products operating under a different label.

Their peer-to-peer structure, reliance on opposing positions, facilitation of wagering on future contingencies and absence of a traditional bookmaker counterparty place them squarely within the same policy and regulatory concerns that have historically surrounded betting exchanges. The emergence of unregulated prediction markets in South Africa, including markets on political outcomes, highlights the urgent need for regulatory clarity.

Until South African Gambling Regulators have enacted a comprehensive legal framework addressing licensing, integrity monitoring, consumer protection, anti-money laundering compliance and taxation, SABA submits that betting prediction markets cannot and should not be authorized to operate in South Africa and should be treated as exchange-style betting products falling outside the scope of the current legislative framework.

SEAN COLEMAN

CHIEF EXECUTIVE OFFICER

Founded in 1951, the South African Bookmakers’ Association is the leading voluntary association for bookmakers and represents the interests of its members in the gambling industry.