Emerging markets seeking to foster a regulated iGaming sector are seemingly set to face a new challenge amidst the infiltration of prediction markets.
The surge of Kalshi and Polymarket has swept through the US, offering an alternative to online sports betting in states where the traditional vertical is currently prohibited.
However, the phenomenon is scaling beyond a US audience, and rising awareness of prediction markets among players means that regulators around the world are now being forced to confront the impact of their sector.
New Zealand joins a growing list
Earlier this week, New Zealand’s Department of Internal Affairs laid down the law on prediction markets, telling local outlet Newsroom that it classifies platforms such as Kalshi and Polymarket as gambling operators. Therefore, falling within the scope of the country’s gambling laws.
New Zealand currently allows online sports betting through Entain’s sportsbook TAB. Meanwhile, the country is in the process of establishing an online casino market made up of 15 licences.
Vicki Scott, the department’s Gambling Director, told Newsroom: “Since [Kalshi and Polymarket] aren’t authorised operators, they are prohibited from offering their gambling products to people in this country.
“To the extent these platforms are taking bets from New Zealand customers, they are breaching the law here and can expect to hear from us.”
New Zealand joins its neighbour Australia, as well as a slew of other nations across Europe, Africa, Asia and Latin America in explicitly outlawing prediction market operators.
Meanwhile, the likes of Polymarket and Kalshi operate in a significant grey area in many markets where there has not been any specific guidance given by governments.
For emerging markets where contention often remains around the regulation of iGaming, the rise of prediction markets marks an unwanted complication for authorities, which in many instances are already dealing with a sizeable black market presence.
Like the black market, a lack of regulation means that players are not afforded the legal protections offered in the legal sector when engaging with prediction markets.
Any bad press risks conflating prediction markets with other forms of gambling may foster negative attitudes towards the wider industry, which hinders the growth of the regulated sector.
Liberia offers an alternative?
On the other hand, the African nation of Liberia has taken the opposite approach. Earlier this month, the country confirmed that it has authorised prediction markets under regulation from the National Lottery Authority (NLA).
This opens the door for international prediction market operators to enter the country and operate within a legal framework that provides protections for players in line with more traditional forms of gambling.
This novel approach may provide a blueprint for other emerging markets seeking to boost the economic potential of gambling, given the opportunity it would present to collect regulatory fees and taxes.
According to a report from Keyrock and Dune, Kalshi and Polymarket alone reported notional volumes of $17.1bn (£12.6bn) and $21.5bn (£15.8bn), respectively, in 2025 – underscoring the popularity of the platforms despite the uncertainty that remains around their legality.
Africa, especially, has shown a tendency to embrace new technologies such as cryptocurrencies, and the prediction markets may find that the continent is more receptive to this alternative compared to more mature markets that are used to traditional forms of gambling.
iGaming Expert Analysis: A vertical surge in the way that prediction markets have has inevitably caused a ripple in global gambling markets, and it’s something that other regions simply can’t ignore.
Going forward, emerging markets now face the choice of remaining with the status quo and banning prediction markets, potentially opening up the vertical to enter the wider black market, or considering the possibility of embracing platforms like Kalshi and reaping the financial benefits of the sector’s growing popularity.
