World Cup Highlights Growing Gap in Global Prediction Markets

This year’s World Cup is the first since the rise of prediction markets, such as Kalshi and Polymarket, which have opened up new options for sports betting.

In the US, fans can collectively wager billions on the event; however, more countries are imposing restrictions on access to platforms that facilitate such betting. The ability for fans to place bets on how many goals Kylian Mbappe scores or who wins the trophy varies by location. In some cases, fans may be completely prohibited from betting.

Analysts at Bernstein estimate that the World Cup could result in around $3 billion in additional wagers, potentially generating up to $10 billion in overall betting volume from both sports-betting and prediction-market platforms.

Recently, Spain, Indonesia, and India have joined a growing list of countries implementing temporary or permanent measures to limit access to the websites and apps of Kalshi and Polymarket — a trend also observed throughout much of the European Union and various regions in Asia.

In April, Brazil shut down 27 prediction platforms, including Kalshi, shortly after their debut in the country, which left co-founder Luana Lopes Lara in a challenging position.

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As these companies expand globally, regulators have amplified their scrutiny of prediction markets, introducing a new type of financial contract that blurs the lines between gambling and financial speculation.

Some nations regard these new financial contracts provided by prediction markets as a form of gambling, making them subject to betting regulations. Others argue they should fall under securities or derivatives laws. This legal ambiguity has allowed startups to present these products to consumers while regulators struggle to keep pace.

“Prediction markets are entering the typical trajectory seen by every innovative financial concept: from niche to mass appeal, and ultimately to legitimacy challenges,” noted Dovey Wan, founding partner of Primitive Ventures, which supports the prediction market platform Opinion Labs. “The recent bans indicate that this sector has gained enough significance to warrant regulatory oversight.”

Prediction market operators claim their platforms provide valuable insights by aggregating collective forecasts on various topics, from economic indicators to geopolitical events. Critics argue, however, that these contracts can encourage speculative behavior and open doors for insider trading, alongside ethical issues arising from betting on life-and-death situations.

“Betting isn’t an entirely new concept,” remarked Chris Holland, a partner at Singaporean consulting firm HM Strategy. “What’s transformative is the structure.” Because prediction market contracts are often classified as derivatives, they fall outside conventional gambling regulations, creating an enticing opportunity for insiders, he explained.

While Kalshi and Polymarket remain dominant in the prediction market space, several other firms are making international moves, including Opinion Labs, with backing from Binance co-founder Changpeng Zhao’s YZi Labs, and Limitless, supported by Coinbase Ventures.

Multiple exchanges have formed marketing partnerships with soccer leagues and teams in preparation for the World Cup, aimed at increasing visibility around the tournament.

The prediction market sector is both lucrative and on the rise. Analyst Patrick Moley from Piper Sandler pointed out on Monday that the World Cup is like experiencing “the Super Bowl every day,” leading to record daily volumes on Kalshi since last Friday.

User-compiled data on Dune Analytics shows that Polymarket recorded roughly $2.8 billion in notional trading volume across its US and international platforms in the first week of June, an increase from $2.1 billion the previous week. Kalshi reported around $4.5 billion in trading volume during the same time frame, up from $4.2 billion.

Crafting a regulatory framework to control these sites has proven challenging for national regulators. These companies have quickly globalized, unlike traditional gambling operations that typically confine themselves to specific jurisdictions. The use of virtual private networks and cryptocurrencies allows them to circumvent local regulations, complicating attempts to halt their activities completely.

The Indian government has found that users can still access “illegal and blocked” prediction markets, pointing out that “Polymarket and several other similar platforms” are allowing the use of virtual private networks to bypass the national ban. The government has urged internet service providers to remove access to these sites.

Both Polymarket and Kalshi feature terms of service that prevent users from certain countries, including those that have recently cracked down on these platforms. They are also enhancing safeguards against insider trading and market manipulation as scrutiny on prediction markets increases.

Polymarket is working with blockchain analytics firm Chainalysis Inc. to monitor its platform for any suspicious trading activities.

A Kalshi advertisement at a bus stop in Washington, DC.

“We welcome the opportunity to collaborate with nations like Spain and Brazil to find a forward path that promotes responsible innovation, transparency, and user safety in prediction markets,” a Polymarket spokesperson commented via email. The firm is actively monitoring for insider trading and illicit activities, in accordance with industry standards, the representative added.

Opinion Labs has restricted access for users from various jurisdictions and is blocking any sanctioned addresses, as indicated by Chief Investment Officer Alex Chan in an email response. “We are working closely with local authorities to establish compliant platforms in their respective regions.”

Kalshi has implemented safeguards, including customer identification checks and employee disclosures. “We are engaging with regulators in multiple jurisdictions for potential expansion,” said Valeria Vouterakou, international counsel for Kalshi, in an email statement. “As interest in World Cup markets rises, ensuring market integrity remains our priority.”

Limitless did not respond to email requests for comment.

Currently, prediction markets operate legally across a variety of jurisdictions; however, it is becoming increasingly clear that governments are less willing to permit these platforms to exist within a regulatory gray area.

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