"Prediction Market Platforms May Need to Operate Under Gambling Licenses": Devexperts' Jon Light

⦿ Executive Snapshot

What: Prediction market platforms may require gambling licenses due to regulatory scrutiny.
Who: Jon Light, Senior Director of Product Management at Devexperts; Kalshi; Polymarket; Plus500; IG Group; CME Group.
Why it matters: As prediction markets gain popularity, their classification and regulatory framework could reshape how they operate and integrate within existing trading infrastructures.

The sector volume for prediction markets reached $51B in 2025 and is expected to hit ~$240B in 2026, with projections of $1T by 2030.
Kalshi recently overtook Polymarket as the largest prediction market, doubling its valuation to $22B.
Brokers face operational challenges related to liquidity management and regulatory compliance when integrating event-based products into their offerings.
Devexperts launched event-based trading infrastructure in November 2025, positioning itself as a white-label provider for brokers entering the prediction market space.
Event-based contracts are often compared to binary options, leading to potential classification as gambling products in various jurisdictions, complicating licensing requirements for brokers.

The rise of prediction markets has been fueled by increasing public interest and participation, especially following major events like the US Presidential election.
Brokers and exchanges are treating prediction markets as extensions of their existing trading technologies, rather than as a completely new asset class, reflecting a trend towards diversification in trading offerings.

Immediate implications include the need for brokers to navigate complex regulatory landscapes, which could affect market entry and operational strategies.
Long-term implications may see the evolution of prediction markets as a recognized asset class, potentially leading to more structured regulation and integration within traditional financial markets.

Potential regulatory risks include the classification of prediction markets as gambling products, which could necessitate obtaining gambling licenses and adhering to different compliance standards.
Liquidity risks are significant, as trading volumes can fluctuate dramatically around major events, leading to thin order books and challenges in maintaining price stability.

The upcoming regulatory decisions and licensing requirements for prediction markets in various jurisdictions will be critical to monitor.
Developments in infrastructure and partnerships, such as CME Group's entry into event-based products, will signal the market's evolution and acceptance as a legitimate trading category.