This year’s World Cup is the first since prediction markets such as Kalshi and Polymarket exploded to popularity as a new way to bet on sports.
Fans in the U.S. are free to collectively wager billions of dollars on the tournament, but a growing number of other countries are making it harder to access the platforms offering those bets. Whether fans can bet on how many goals Kylian Mbappé scores for France or who wins the tournament may depend on where they live. In some cases, fans may not be able to bet at all.
In just the last few weeks, Spain, Indonesia, and India have joined the growing list of countries — including most of the European Union and large parts of Asia — that have put in place temporary or permanent measures to cut off access to the Kalshi and Polymarket websites and apps.
Brazil shut down 27 prediction platforms in April, including Kalshi, whose co-founder, Luana Lopes Lara, is Brazilian, leaving the company scrambling shortly after it launched in the country.
Regulators have intensified their scrutiny of prediction markets as the companies have expanded rapidly around the world, offering a new kind of financial contract that straddles the line between gambling and financial speculation.
Some countries view the new types of financial contracts offered by the prediction markets as a form of gambling and subject them to betting laws. Others argue that they should fall under securities or derivatives rules. The start-ups have used the legal uncertainty around their new products to offer them to customers even as regulators struggle to catch up.
“Prediction markets are entering the same phase every novel financial primitive eventually enters: first hobbyist market, then mass attraction, then legitimacy fights,” said Dovey Wan, founding partner of Primitive Ventures, a backer of prediction market platform Opinion Labs. “The recent bans mean the category has become important enough to regulate.”
Prediction market operators argue their platforms provide valuable information by aggregating collective forecasts on everything from economic indicators to geopolitical events. Critics counter that the contracts can encourage excessive speculation, and also open new opportunities for insider trading, alongside the ethical issues created by making it possible to bet on the war and other matters of life and death.
“Betting isn’t new,” said Chris Holland, partner at Singaporean consulting firm HM Strategy. “What’s new is the structure.” Because prediction market contracts are typically classified as derivatives, they fall outside gambling licensing frameworks, he added. “That gap is an open invitation to insiders.”
Though Kalshi and Polymarket are by far the largest prediction companies, many more are expanding globally, including Opinion Labs, which is backed by Binance cofounder Changpeng Zhao’s family office YZi Labs, and Coinbase Ventures-backed Limitless.
A number of exchanges have cut marketing deals with soccer leagues and teams ahead of the World Cup to increase their visibility around the tournament.
The markets are big business, and growing. On Monday, Piper Sandl analyst Patrick Moley wrote that the World Cup was “like the Super Bowl every day,” and was driving record daily volumes on Kalshi.
Polymarket recorded around $2.8 billion in notional trading volume across its international and U.S. exchanges in the first week of June, according to user-compiled data on Dune Analytics, up from $2.1 billion a week earlier. Kalshi reported about $4.5 billion over the same period, up from $4.2 billion.
Creating a regulatory framework that restricts the sites is proving a challenge for country-specific regulators. The companies have been rapidly expanding around the world, unlike traditional gambling companies that are generally restricted to a specific jurisdiction. The use of virtual private-networks and cryptocurrencies make it easier to operate without going through local financial firms and regulators, and makes it difficult to completely shut the platforms down.
India’s government said users were able to access “illegal and blocked” prediction markets and said “Polymarket and a few other similar sites” were enabling the use of virtual private networks to circumvent the national ban, The government asked internet providers to cut off access to the platforms.
Polymarket and Kalshi’s terms of service already prohibit people from signing up in certain countries, including many that have recently taken steps to crack down on the sites. They’ve also strengthened safeguards against insider trading and market manipulation as prediction markets face growing scrutiny.
Polymarket is partnering with blockchain analytics firm Chainalysis Inc. to help police its platform related to suspicious trades.
“We welcome the opportunity to collaborate with Spain, Brazil, and other countries on a path forward that supports responsible innovation, transparency, and user protection in prediction markets,” a Polymarket spokesperson said in an email. The firm monitors for insider trading and other illegal activity, consistent with other markets, the spokesperson added.
Opinion Labs has restricted access for users from various jurisdictions and blocked any sanctioned addresses, said Alex Chan, chief investment officer, in an emailed response. “We are working closely with a number of local authorities toward launching compliant local platforms.”
Kalshi and Limitless didn’t respond to email seeking comments.
For now, prediction markets remain legal in a patchwork of jurisdictions, but the direction of travel is becoming clearer: Governments are increasingly unwilling to let platforms operate in a regulatory gray zone.
Emily Nicolle, Sidhartha Shukla, Alice French, Yian Lee, Betty Hou, Lulu Yilun Chen, and Amanda Wang contributed to this article.
