Prediction Markets: The new wave in gambling

In the world of online gambling, an old acquaintance reappears in new guise: prediction markets. While the debate used to be whether they were gambling or financial trading, today people are asking if they will shape the future of this industry. I have been following this development with great interest since my early days as a casino editor in 1997.

The concept might seem new, but it is not really. Betting exchanges have long had a similar functionality, where customers bet against each other. The operator acts as an intermediary, not as a direct bookmaker. However, due to the success in the United States, driven by platforms like Kalshi and Polymarket, the topic has gained new momentum. These market players show that there is a global appetite for trading predictions, from elections to economic data and sporting events. Gibraltar is taking an exciting approach, trying to regulate these markets responsibly instead of forbidding them. This aligns with an approach that does not see innovation and regulation as adversaries.

Numbers and facts

Prediction markets experienced an explosion in popularity in 2025, driven by regulatory successes and growing liquidity. Kalshi, a frontrunner in this field in the US, recorded remarkable funding success in 2025: the company was valued at 11 billion US dollars, according to "Gambling Insider," following a Series E funding round. In 2025 alone, Kalshi generated 263.5 million US dollars in fee revenue, mainly from sports. Kalshi is under the direct supervision of the Commodity Futures Trading Commission (CFTC) in the USA, which provides users with legal clarity and transparent settlement rules. Polymarket, another key player, was valued at 9 billion US dollars in 2025 and is also CFTC-approved. These platforms allow trading of contracts that are traded between 0.00 and 1.00 US dollars and, if the event occurs, pay out 1.00 US dollar.

Background

The exciting thing about prediction markets is how they differ from traditional sports betting. In sports betting, players bet against a bookmaker who sets odds to balance their risk and include a profit margin, the so-called "vig" or "juice." The quoted odds often do not represent the "true" probability of an event but rather the probability adjusted for the bookmaker's risk distribution and profit margin. Prediction markets, on the other hand, function more like financial exchanges. Players trade directly with each other here. There are no fixed odds. Instead, the price of a "share" or contract representing the occurrence of an event is determined purely by supply and demand. The operator acts as an intermediary and charges a fee.

"Sports betting is an entertainment product built on a mathematical disadvantage for the bettor. In contrast, prediction markets are financial instruments designed for information discovery." - Sofoluwe Mayowa, Gambling Writer at Gambling Insider

This distinction is crucial because it appeals to different types of players. While sports betting tends to focus on entertainment and simplicity, prediction markets reward analytical participants and traders. They are apparently not designed to replace sports betting but rather to complement its offering. Anyone who wants to express their opinion monetarily, be it on an election, inflation, the World Cup, or the Oscars, will find a platform here. It is about trading confidence in the future, not reinventing betting.

Why it matters for German players

For German players, prediction markets, as they are booming in the USA, are currently still a gray area or simply not available in that form. Gambling regulation in Germany is very strictly regulated by the German Interstate Treaty on Gambling 2021 (GlüStV 2021). The GlüStV focuses on classic casino games and sports betting. Concepts such as trading "event contracts," which resemble financial instruments, do not easily fit into the existing licensing model of the Joint Gambling Authority of the Federal States (GGL). Currently, German players must concentrate on the offerings of GGL-licensed providers. Here, strict rules apply: a maximum bet of 1 Euro per spin on slot machines and a monthly deposit limit of 1,000 Euro via the cross-state deposit system LUGAS. This is intended to ensure player protection. Prediction markets could fail due to these hurdles, especially the distinction between gambling and financial products. A regulated introduction in Germany would require an adjustment of the GlüStV or the creation of new legal frameworks. Until then, German players will continue to rely on the familiar, GGL-licensed offerings.

What it means for GGL-licensed casinos

The development of prediction markets currently poses no direct threat to the business models of GGL-licensed casinos. These operate in a clearly defined regulatory environment and target players who seek entertainment through traditional casino games or sports betting. It is unlikely that prediction markets will receive a GGL license in the near future, as they have a fundamentally different structure and could be understood more as financial products than as gambling in the sense of the GlüStV. I expect the GGL to continue to focus on enforcing existing regulations to ensure the safety and protection of players in Germany. Casinos with a German license therefore do not have to fear immediate repercussions but should closely monitor developments abroad in case there is a long-term adaptation or influence on the gambling market. The GGL has shown in the past that it pays close attention to new trends.