Malta’s Interest in Regulating Prediction Markets

Malta is one of the biggest players in the global iGaming industry, and within Europe, it is perhaps the fastest moving regulator. That is why comments from the Economy Minister, Silvio Schembri, regarding the country actively exploring a regulatory framework for prediction markets has massive implications. It could be the next biggest industry move for the nation island, and for prediction market brands, this is the kind of news that could revolutionize the industry. Prediction markes are legal in the US, though there are many legal controversies and cases against them for bordering too much on the lines of sports betting.

In Europe, the environment is a lot more hostile. Big brands like Kalshi and Polymarket are blocked in several regions, in the UK they fall under gambling laws, and there is no cross border framework for these products. Access is tolerated in some jurisdictions, but the regulation is far from straight forward. This leaves a gap, and one that an influential jurisdiction like Malta can definitely open up, which will no doubt prompt other major European jurisdictions to clarify their legal stances on prediction markets.

Malta’s Stance on Prediction Markets

The comments were made during the opening of new Blockchain.com offices in Malta, strengthening the country’s role as a strategic digital assets hub. The company, one of the earliest crypto platforms in Europe, is establishing itself in Malta, the country that was among the first jurisdictions to introduce crypto laws back in 2018. As part of the EU, Malta can extend these services to European countries via frameworks like Markets in Crypto-Assets (MiCA). This creates a uniform set of rules that can be carried across EU borders, something like a single licensing “passport” if you like.

The Economy Minister Schembri took the opportunity to talk about the country’s aspirations beyond blockchain regulation, and suggested the government is considering regulating prediction markets. These were described as an area with rapid global momentum, with opportunities for innovation, provided they are supported by clear and forward-looking legislative frameworks.

Schembri also mentioned the importance of why Malta has the advantage here to break ground with these products. It was one of the earliest adopters of blockchain regulation, and a key pioneer in the EU iGaming industry.

How Malta Revolutionized iGaming in the EU

Nowadays Malta is recognized as a leading iGaming jurisdiction, regulated by the Malta Gaming Authority. It licenses online casinos and sportsbooks that operate across Europe and game vendors, B2B platform solutions, and other technological systems suppliers. It all began in 2004, when Malta introduced its Remote Gaming Framework, one of the first of its kind. Online gambling was, at that point, either ignored or made illegal in other EU countries at the time, but skip forward 10 years and nearly all major jurisdictions set up their own framework.

The iGaming operators and suppliers licensed in Malta do not generally target the domestic market. Malta was seen as a perfect entry to the EU, where operators could obtain local licenses and then spread their product to all the European countries. Though nowadays it is not as widespread as it was, many EU countries now require local licenses and permissions, even for operators based in Malta. Still, the Malta Gaming Authority is regarded as a top jurisdiction, and it is continuously reforming its iGaming legislation to push international standards for player safety and fair gaming.

Status of Prediction Markets Across Europe

Prediction markets are a new territory for the grand majority of EU countries. There is no uniform framework for these products across the continent, and many have either blocked or ignored prediction markets – much like online casinos and sportsbooks back 20+ years ago. Big companies like Robinhood want to break Europe, and you get the likes of Kalshi and Polymarket offering their services, but these may be limited, or in the worst case, countries block the operators so users can’t access prediction markets.

Gambling Regulation

In the UK, prediction markets are overseen by the UK Gambling Commission. They are not treated as financial derivatives or exchanges, but betting products, and operators need licenses to gain access. They don’t need to get a gambling operator license or register as a sportsbook, but instead, they are classified as betting exchanges. Prediction markets can therefore obtain the betting intermediary gambling licenses to operate in the UK.

But this does limit what prediction markets can offer. In other European regions, there are cases about prediction markets falling under financial regulation, and classified as event contracts or financial derivatives. But prediction markets are not explicitly described in the legislation.

Outright Blocks

France, Italy, Spain, Germany, and (the strictest) Belgium have all actively blocked select prediction market sites. In 2025 and 2026 so far, gambling laws have tightened and we have seen an increasing number of operators either reform their gambling laws completely or introduce new measure to crack down on the black market. From cross border data sharing alliances to coming down heavy and blocking skin sites, many jurisdictions are closing those regulatory loopholes that black market gambling sites use to enter their markets.

Prediction markets, however, are not online casinos or online sportsbooks. There are definitely comparisons to be made with the sports betting products offered at betting sites, but these are not managed the same way. They probably do reflect betting exchanges more closely, with the peer to peer trading functionalities, as the UK has classified them. But they aren’t exactly betting exchanges either.

US Prediction Market Controversies

2025 was a big year for prediction markets in the US. Right before that, the CFTC licensed Kalshi, and this brought on a wave of prediction markets trying to go through the same legal channels to follow suit. Prediction markets are regulated by the Commodity Futures Trading Association (CFTC) and they can obtain Designated Contract Markets that comply with the Commodity Exchange Act principles. They are thus regulated at a federal level, and therefore, technically legal in all 50 states.

But 2025 also saw prediction markets, like the returning Polymarket, roll out sports style event contracts. A big rollout came right before the NFL betting season started, with flexible parlay-style sports contracts and more options for sports bettors. The real money sportsbooks in the US, which stood strongly against prediction markets, changed their stance when FanDuel, Fanatics and DraftKings all launched their own prediction markets. The US public remains pretty divided on the sites, with most thinking they are an alternative form of sports betting, and thus raise concerns about their nationwide availability.

Lawmakers in several states went head to head with prediction markets, suing Kalshi and Polymarket, among others, for their offerings. A lot of these prediction market lawsuits are still ongoing, as the courts try to determine whether or not they are protected by federal law, or whether they deliberately cross into sports betting and thus, should be regulated by state gambling authorities.

The Booming Potential of Prediction Markets

Prediction markets have swept across the US in the past year and a half, and the momentum is only building. In 2025, Kalshi made around $263.5 million in fee revenue, mostly from sports contracts, and the annual trading volume was estimated at around $9 to $10 billion over the year. This year’s Super Bowl generated $1.76 billion in legal wagers at sportsbooks, and prediction markets were estimated to generate a handle of just over $1 billion.

The money these exchanges, many of them just a few years old, are making is phenomenal. But the big question for European operators and lawmakers is whether prediction markets can replicate that success outside the US. Betting preferences, popular sports and the overall accessibility and competitiveness of legal sports betting markets across Europe are very different from the US.

• Are they an alternative for people in states with no legal sports betting?
• Is the wagering format better suited to American betting preferences?
• Could prediction markets compete in countries with 20+ legal betting options?

America’s legal sports betting industry is very young, and it looks very different from many European markets. In fact, just compare it to Ontario, which now has over 80 betting sites, that is roughly 4x more than the states with the most live (and legal) operators. A lot of European countries have similarly larger markets, with more options, and it raises the question of how effective a prediction market could be – or whether the prediction markets would be seen as a novelty trend that only takes off because of US popularity.

Malta, it seems, is eager to find out. It is still very much a theoretical move right now, but in the coming weeks and months – knowing how quickly Malta moves from experience – this could be one of the biggest developing stories of the year.