How Malta Is Approaching Prediction Markets Regulation

Malta could be about to make history. As Malta explores prediction markets regulation for the first time, Economy Minister Silvio Schembri confirmed the government is actively assessing how these platforms could operate under a formal legal framework. He described the sector as one with serious global momentum and real potential for innovation.

Schembri made the announcement at the inauguration of Blockchain.com’s new offices in Malta. He was clear that any framework would need to prioritise user confidence, transparency, and compliance. Growth, he argued, only follows when users trust that a market is properly supervised.

What Are Prediction Markets?

Prediction markets work like financial exchanges. Instead of stocks or commodities, participants trade contracts tied to the outcomes of real-world events. Elections, economic data releases, and sports results all serve as the basis for these contracts. Prices shift in real time to reflect what the market collectively believes will happen.

The core regulatory problem is that these platforms sit awkwardly between gambling and financial trading. Operators argue their products should be treated as financial instruments. Most jurisdictions have defaulted to treating them as gambling. The result is a fragmented and often contradictory global picture.

A Sector Growing at Serious Speed

The scale of the industry is hard to ignore. US-based platforms Kalshi and Polymarket combined for more than $37 billion in wagering volume throughout 2025. December alone recorded over $18 billion in monthly trading. Kalshi has reportedly reached a valuation of around $20 billion.

That growth has brought scrutiny. In the United States, a bipartisan debate is playing out in Congress over how to classify these products. One Democratic senator has argued that sports prediction contracts are simply sports bets under a different name. Republican colleagues have pushed back with a different view. The Commodity Futures Trading Commission provides oversight for some platforms, but state-level interpretations vary considerably.

Europe’s approach has been even less consistent. Germany, Belgium, Portugal, and the Netherlands have all blocked access to platforms like Polymarket, citing unlicensed gambling activity. The UK Gambling Commission has taken a clearer position. It states that prediction markets are functionally equivalent to betting exchanges and must be licensed accordingly.

Malta’s Track Record Sets the Stage

When it comes to Malta, prediction markets regulation would follow a familiar pattern. The country became the first EU member state to regulate remote gaming in 2004. That decision helped build an iGaming sector now worth around 12 per cent of GDP. In 2018, Malta introduced blockchain and cryptocurrency legislation years ahead of the EU’s own MiCA framework.

Schembri drew a direct parallel to that earlier work. He recalled how Malta recognised early on that user safety and compliance standards were foundational. No new industry grows, he argued, without first earning user trust.

What a Framework Could Mean for the Industry

The initiative is still at an exploratory stage. No legislation has been introduced. Officials have been careful to frame this as an assessment rather than a confirmed policy direction. But the signal carries weight.

If Malta moves forward with prediction markets regulation, operators would gain a defined legal environment. They could serve the broader European market from a single regulated jurisdiction. No other EU country currently offers that. For platforms operating in legal grey areas across the continent, it would be a significant development.

The sourcing and verification of data used to settle contracts is one technical issue likely to feature in any framework discussion. It has already become a focus area for regulators elsewhere. Malta will need a clear answer on it to set a workable standard.