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South African Bookmakers Association Calls for Ban on Prediction Markets

South African Bookmakers Association Calls for Ban on Prediction Markets – Cites Integrity and AML Risks

Key Takeaways

• The South African Bookmakers Association has called for a ban on prediction markets in South Africa.
• The association cites sports integrity, regulatory oversight gaps, and anti money laundering risks as key concerns.
• More than R700,000 was reportedly wagered on a mayoral outcome on the platform Polymarket.
• SABA argues that prediction markets function similarly to betting exchanges and may not be authorised under existing legislation.
• The association recommends legislative review and classification of prediction markets under exchange style betting rules.

SABA Raises Concerns Over Growth of Unregulated Prediction Platforms

The South African Bookmakers Association, known as SABA, has called for prediction markets to be banned in South Africa. In a public statement, the industry body referred to what it described as the emergence and growth of unregulated prediction market platforms in the country.

SABA cited a 19 July report by News24 which stated that more than R700,000, equivalent to about US$41,750, had been wagered on who would become Johannesburg’s next mayor. The wagers were reportedly placed on the platform Polymarket. According to SABA, this example illustrates the scale of activity already taking place on such platforms.

The association argues that prediction markets currently operate outside South Africa’s established gambling oversight structures. It describes this situation as creating a substantial regulatory blind spot.

Integrity Risks Highlighted by International Horseracing Body

In its statement, SABA referred to an April report by the International Federation of Horseracing Authorities, or IFHA. The IFHA described prediction markets as a significant and emerging challenge for sports integrity.

According to the IFHA report cited by SABA, prediction markets allow participants to profit from underperformance. This structure, the association argues, may increase integrity risks compared to traditional betting models.

SABA stated that these concerns become more pronounced when prediction markets extend beyond sports events. The association pointed to markets covering political elections, legislative decisions, public appointments, regulatory outcomes, and financial events. In its view, such markets may create additional vulnerabilities if monitoring systems are not in place.

The association added that South Africa currently lacks the monitoring capabilities needed to detect potential manipulation in these markets.

Legal Status and Comparison With Betting Exchanges

A central argument in SABA’s position concerns the legal classification of prediction markets. The association reiterated earlier concerns about the North West Gambling Board’s offering of a betting exchange licence. SABA argues that existing legislation does not expressly authorise such licences.

According to the association, prediction markets function in a similar way to betting exchanges. Instead of accepting betting risk directly, operators facilitate peer to peer transactions between participants.

SABA stated that prediction market operators similarly facilitate transactions rather than taking on betting risk themselves. As a result, it argues there is a legitimate question as to whether existing gambling legislation authorises such activities at all.

Based on this interpretation, the association recommends that prediction markets be recognised as exchange style betting products. It says they should therefore be regulated under the same standards that apply to betting exchanges.

Anti Money Laundering and Cross Border Transaction Concerns

SABA also raised concerns related to anti money laundering, known as AML. It argues that prediction markets present heightened AML risks because they facilitate large volumes of peer to peer transactions and rapid movement of funds.

The association highlighted several specific risk factors. These include offsetting positions, cross border activity, cryptocurrency transactions, and fragmented transactional records. According to SABA, these characteristics can make oversight and enforcement more difficult.

In addition, the association stated that offshore prediction market operators are not subject to South African responsible gambling obligations. It said they are not bound by local self exclusion systems, advertising restrictions, affordability controls, customer dispute resolution mechanisms, local taxation requirements, or contributions to the National Responsible Gambling Programme.

SABA also pointed to taxation issues. It said prediction markets raise questions regarding commissions, gross gaming revenue, offshore settlements, cryptocurrency transactions, and cross border profit extraction.

Call for Legislative Review and Interim Classification as Illegal Offshore Activity

Beyond calling for a ban, SABA recommended a broader legislative review. It said such a review should cover gambling law, financial market regulation, electoral legislation, consumer protection, anti money laundering obligations, and integrity monitoring frameworks.

According to the association, until such a regulatory framework is introduced, prediction market operators should be regarded as part of the illegal offshore market. On that basis, SABA argues they should not be authorised to operate in South Africa.

Our Assessment

The South African Bookmakers Association has formally requested that prediction markets be banned, citing integrity, legal, and anti money laundering concerns. It argues that these platforms resemble betting exchanges and may not be authorised under current gambling legislation. The association also calls for a comprehensive legislative review and, in the interim, classification of prediction market operators as part of the illegal offshore market. For users and operators, the debate centres on regulatory status, compliance obligations, and potential future enforcement in South Africa.