The South African Bookmakers’ Association has recently urged regulators to label prediction markets as exchange-style betting products that operate outside the country’s gambling laws. The SABA warned that platforms such as Polymarket could be harmful for consumers, sporting integrity, and enable financial crime.
In a July 27 policy, the association argues that prediction markets should not be permitted to operate in South Africa until lawmakers establish a dedicated legislative framework governing their licensing, oversight, and taxation.
The paper follows reports that more than R700,000 was wagered on the selection of Johannesburg’s next mayor on the prediction market platform Polymarket, despite Polymarket operating outside South African regulatory oversight.
Prediction markets don’t work like traditional South African online casinos, and SABA insists they are similar to betting exchanges as they allow users to wager directly against one another. That’s why the association believes they should be subject to the same regulatory standards as exchange-style betting products.
“Prediction markets are, in substance, exchange betting products operating under a different label,” SABA claimed in the paper.
Integrity and Consumer Protection Concerns
According to SABA, prediction markets come with many of the same integrity risks traditionally associated with betting exchanges while extending them beyond sport into politics, economics and public governance.
The paper points to the International Federation of Horseracing Authorities’ long-standing concerns that products allowing users to profit from losing outcomes create stronger incentives for match-fixing, insider trading, corruption and other forms of market manipulation.
However, SABA noted that these concerns become even more significant when markets are offered on elections, political appointments, legislative decisions and regulatory outcomes, where participants may have financial incentives to influence democratic processes.
SABA also warns that South Africa currently does not have the required monitoring systems to properly detect or prevent manipulation linked to political prediction markets, creating what it describes as a regulatory blind spot.
Money Laundering Risks Should Not be Neglected
Beyond integrity concerns, the paper highlights potential anti-money laundering risks, noting that offshore prediction market operators frequently facilitate cross-border transactions, cryptocurrency payments and peer-to-peer settlements that are more difficult for authorities to monitor.
It also argues that consumers using such platforms do not benefit from the responsible gambling safeguards, self-exclusion systems, dispute resolution mechanisms and taxation requirements imposed on licensed South African bookmakers.
Gambling Laws Leave Prediction Markets in a Grey Area
A key argument in SABA's paper is that South Africa's existing gambling legislation was not designed to accommodate prediction markets or betting exchanges.
The association maintains that exchange-style platforms do not fit neatly within the statutory definitions of either bookmakers or totalisators because they merely facilitate wagers between customers rather than acting as counterparties themselves.
SABA also reiterated its long-standing concerns over provincial betting exchange licences, arguing that regulators should not authorise products that lack explicit legislative backing.
To address the issue, SABA recommends a comprehensive legislative review covering gambling regulation, financial markets, electoral law, consumer protection, anti-money laundering obligations and integrity monitoring.
Until such a framework exists, the association says prediction market operators should be regarded as part of South Africa's illegal offshore gambling market.
South Africa’s iGaming Sector Remains Fragmented
The debate over prediction markets comes against the backdrop of South Africa's fragmented online gambling regime.
The country permits licensed online sports betting through provincially licensed bookmakers operating under the National Gambling Act and provincial gambling legislation. However, online casino gambling, including online slots, roulette, blackjack and other casino games, cannot legally be offered by domestic operators.
Despite the prohibition, offshore online casino operators remain widely accessible to South African consumers, creating an extensive unlicensed market that falls outside the country's regulatory and taxation framework.
Industry stakeholders have long argued that the rapid growth of offshore gambling websites has exposed shortcomings in legislation that predates many modern forms of online wagering.
SABA argues that prediction markets represent the latest example of gambling products exploiting those regulatory gaps by operating without local licensing, responsible gambling obligations or consumer protection measures.
Global Regulatory Scrutiny Intensifies
South Africa is not the only country trying to rein in the rapid expansion of prediction markets.
Other Regulators have also increased scrutiny of platforms such as Polymarket and Kalshi as the products become increasingly popular for wagering on elections, sporting events, financial markets and geopolitical developments.
The sector has sparked debate over whether such platforms should be regulated as gambling products, financial instruments or a distinct category altogether.
Against that backdrop, SABA believes South Africa should adopt a precautionary approach by ensuring prediction markets cannot operate until lawmakers establish a clear legal framework governing licensing, taxation, consumer protection and market integrity.
“Until South African Gambling Regulators have enacted a comprehensive legal framework addressing licensing, integrity monitoring, consumer protection, anti-money laundering compliance and taxation.”
In conclusion, the association states that betting prediction markets cannot and should not be authorised to operate in South Africa. It remains to be seen whether the government will agree to its anti-prediction markets submission.
