Prediction Markets: Unlicensed betting by another name? WLA calls for global regulation - Part 1
Consumers without protection, sports exposed to manipulation, and licensed operators at a competitive disadvantage. That is the picture the World Lottery Association (WLA) sets out in its 2026 position paper on prediction markets. In the first instalment of this two-part series, we examine the association’s principal warnings and the rapid growth of these platforms, which have scaled from under $100 million in monthly volume to $26 billion in January of this year.
A bet in financial clothing: how the business model works
One practice has been gaining ground over the past two years at a pace that has unsettled gambling regulators worldwide: prediction markets. Platforms that allow users to bet on the outcome of a football match, a presidential election or the release of an economic data point present themselves to authorities as financial derivatives markets. They call their products ‘contracts.’ Bettors are recast as ‘traders,’ and winnings or losses are rebranded as a ‘return on investment.’
In a 2026 position paper, the World Lottery Association (WLA), the global body for state-authorised lottery operators in more than 160 jurisdictions, made its position clear: these platforms constitute a wager and must be governed as such.
According to the WLA, growth in the sector has been deliberately driven by what the industry refers to as regulatory arbitrage. The association states that operators, including Polymarket and Kalshi, have structured their regulatory strategy around their classification by the United States Commodity Futures Trading Commission (CFTC) specifically to avoid state-level gambling licensing requirements. This is not an incidental consequence of the business model. It is the business model.
From $100 million to $26 billion: the growth that alarmed licensed operators
The figures cited by the WLA in its position paper are those most likely to demand the attention of legislators and regulatory bodies. Prediction markets grew from processing under $100 million per month at the start of 2024 to exceeding $13 billion per month by the end of 2025. In January 2026, during the American Super Bowl, monthly volume reached $26.09 billion. Total sector volume for 2025 stood at $63.5 billion, a 400 per cent increase on the previous year.
Kalshi, the CFTC-authorised platform that leads the American market, recorded approximately $22.9 billion in trading volume in 2025, generating an estimated $260 million in fee revenue. According to independent analyst data cited by the WLA, by the end of last year, the company had told its investors it projected an annualised revenue run rate of between $600 million and $700 million.
Polymarket, a crypto-native platform that was fined $1.4 million by the CFTC in 2022 for operating unregistered markets, acquired a CFTC-licensed exchange in 2025 to re-enter the US market. Its valuation surpassed $12 billion by the beginning of 2026.
No licence, no protection: The hidden risks behind prediction markets
What concerns the WLA is not simply the scale of these platforms. It is that more than 90 per cent of their volume derives from contracts tied to sporting events, which makes these platforms de facto sports-betting operators without any of the obligations that status entails. Behind those figures are athletes exposed to match manipulation, consumers with no protection mechanisms in place and regulators yet to close the enforcement gap.
In the second instalment, published tomorrow, we examine documented cases of manipulation, the jurisdictions that have already taken action, and the measures the WLA is urging regulators, sports governing bodies and operators to adopt.
This article was originally published on the Spanish SiGMA News page on 2 June 2026.
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