Tiger Research said Asia’s regulatory gap around prediction markets reflects missing institutional design rather than cultural resistance, arguing that the region has failed to create a legal category that can absorb the business model even as user demand continues to grow.
In its report, the firm said Western jurisdictions that have made room for prediction markets did so not because they are more tolerant of gambling, but because they already had alternative legal pathways outside direct confrontation with gambling law. In Asia, by contrast, regulators often lack both a general licensing framework and an open-ended financial product definition, pushing liquidity toward offshore venues while leaving tax collection, investor protection, and market oversight unresolved.
Classification sits at the center of the debate
The report frames prediction market regulation as a classification problem first. It asks whether these markets should be treated as gambling, derivatives, or a new category built through standalone legislation.
Tiger Research said prediction markets may have value as information platforms, yet the law has never clearly separated them from gambling. That turns the debate into a more basic legal question: what counts as betting.
It cites Section 9 of the U.K. Gambling Act 2005, which defines the object of a bet broadly enough to cover the result of a race, competition, or other event or process, the likelihood of something happening or not happening, and whether something is true. Once money is attached to those outcomes, the activity falls within the scope of gambling regulation. Under that logic, prediction markets structurally resemble betting because they attach economic value to the outcome of a specific event or the truth of a proposition.
From there, the policy choice becomes clear. Regulators can place prediction markets under conventional gambling rules, reclassify them under financial law such as derivatives regulation, or create a standalone legal framework.
Western jurisdictions found legal routes outside a simple gambling ban
The report says the United States, the United Kingdom, and continental Europe reached different outcomes, but the underlying pattern is the same: prediction markets become institutionally acceptable only where regulators have a framework other than ordinary gambling law that can process them.
In the United States, event contracts were absorbed into the derivatives regime under the Commodity Exchange Act. In the United Kingdom, platforms were fitted into a general betting intermediary licensing model. In continental Europe, contracts classified as financial instruments run into the binary options ban, while those that avoid that category face strict national gambling law as a second barrier.
United States: a broader derivatives perimeter
Tiger Research said the U.S. did not accommodate prediction markets by embracing a gambling framework. It did so by applying existing contract structures under the Commodity Exchange Act.
The Commodity Futures Modernization Act of 2000 laid the groundwork through an open-ended definition of “excluded commodities,” allowing non-financial variables such as election outcomes and weather events to sit alongside traditional commodities such as crude oil. The Dodd-Frank Act of 2010 then gave the Commodity Futures Trading Commission, or CFTC, two powers that matter here: exclusive federal jurisdiction over event contracts and authority under Rule 40.11 to prohibit certain contracts tied to terrorism, assassination, war, and gambling.
Neither law was written specifically for prediction markets, the report said, but together they created the legal basis for treating such contracts as financial agreements rather than gambling products. They also established the CFTC as a centralized regulatory counterpart, replacing what would otherwise have been a fragmented, state-by-state political process.
That legal structure eventually produced a market built around licensed entities. Kalshi obtained designated contract market, or DCM, status in November 2020, allowing it to sell a wide range of event contracts to retail investors. Polymarket, after facing enforcement in 2022, moved toward compliance in 2025 by acquiring licensed exchange QCEX.
United Kingdom: folded into betting intermediary licensing
The British route is different. The report says the U.K. did not treat prediction markets as an extension of derivatives law. It treated them as a form of betting and used the existing Gambling Act 2005 to pull them into supervision.
Three provisions are central in the report’s reading. Section 9 provides a broad definition of betting. Section 13 on “betting intermediary” closely matches the structure of prediction market platforms because they match contracts between users rather than taking direct positions themselves. Section 65(4) allows license categories to be adjusted by ministerial order, which gives the framework room to absorb new market models without requiring separate legislation.
In February 2026, the Gambling Commission stated that prediction market platforms fall within the “betting intermediary” category and must hold the relevant license. Tiger Research said that did not amount to a blanket prohibition. It created a defined access route, with strict penalties for unlicensed activity and an open registration channel for firms willing to comply.
Even so, major global operators have remained cautious about entering the U.K. market. The report ties that reluctance to their litigation strategy in the United States. Kalshi and Polymarket have both argued heavily that prediction contracts are financial derivatives rather than gambling. Obtaining a British betting intermediary license would formally classify them as gambling operators, which could weaken their legal position in U.S. court fights.
That distinction has opened room for local players. Matchbook, an existing betting exchange, launched “Matchbook Predictions” in January 2026 using its betting intermediary license. New entrant Versus also secured a UKGC general betting license and launched its own prediction market.
Continental Europe: blocked by both financial and gambling law
On the European mainland, Tiger Research describes a two-layer barrier made up of MiFID II financial regulation and national gambling law.
If an event contract is classified as a financial instrument, it immediately hits the binary options ban. If it avoids that label, it then runs into strict gambling definitions and licensing systems across member states.
In July 2026, the European Securities and Markets Authority, or ESMA, stated in an official announcement that the binary payout structure of event contracts falls fully within the binary options prohibition. The report says that effectively shut the door on entering Europe as a financial product.
The gambling-law route is not much easier. France is presented as the clearest example, where the National Gaming Authority, or ANJ, escalated enforcement in phases and ultimately classified prediction market operations as illegal gambling.
The lone exception identified in the report is Gibraltar. In July 2026, Gibraltar introduced a dedicated Prediction Markets Regulations framework and defined prediction markets as a distinct “third category.” Tiger Research describes that as the creation of a new route rather than operation inside an existing one. It also notes the obvious limitation: Gibraltar is not an EU member state, so the model does not benefit from internal European mutual recognition.
Still, the report does not rule out future change in Europe. The European Commission has formally placed the legal treatment of prediction markets into the review process for the Markets in Crypto-Assets regulation, or MiCA. Depending on the conclusions of the report due in June 2027, a new framework that can accommodate prediction markets may yet emerge.
Asia’s problem is not demand. Its legal systems do not have a place for the model.
Tiger Research says Asian jurisdictions face two structural obstacles that do not appear in the same form in the West.
One is the dominance of state-controlled gambling licensing. In much of Asia, there is no general licensing structure comparable to the U.K.’s betting intermediary category that can absorb private-sector innovation. Licensing rights are typically distributed through state-controlled monopoly arrangements.
The second is a narrow approach to financial product classification. In South Korea and Japan, the report says, financial law tends to use closed positive lists to define underlying assets. That makes it legally difficult to reproduce the U.S. move of bringing non-financial contingent events into the derivatives perimeter.
As the Western cases show, whether prediction markets can take root depends on which path defines them: gambling law or financial product regulation. In Asia, the report argues, the deeper constraint is that neither system currently provides the institutional base needed to accommodate the model.
Tiger Research also rejects the idea that the region’s stance reflects cultural discomfort. Japan, South Korea, Singapore, and Hong Kong already have legal gambling markets. The real issue, it says, is not whether society can accept speculation, but how a regulatory foundation should be designed for this new kind of market.
South Korea: criminal enforcement becomes the default
In South Korea, the report says domestic discussion has not yet reached the stage of debating the legal status or social value of prediction markets. The current framework tends to treat them as speculative products by default, cutting off substantive discussion before it begins.
Existing law already overlaps with how these platforms operate. The Act on Special Cases Concerning Regulation and Punishment of Speculative Acts covers “prize business,” defined as a business that distributes money or property based on correctly predicting the outcome of a specific event. Tiger Research says that resembles the structure of prediction markets.
But the legal fit is not complete. The prize-business framework assumes a casino-style structure in which the operator directly controls the pool of funds. Modern platforms such as Polymarket use a matching architecture, facilitating contracts between users rather than directly holding customer funds. The report says there is still no judicial interpretation clarifying how that structural distinction would be treated under current Korean law.
The financial-law route is also closed. South Korea’s Capital Markets Act uses a positive-list approach to underlying assets. Financial indicators are covered, but there is no explicit basis for classifying non-financial variables such as election results as derivatives. On top of that, the right to operate gambling businesses remains reserved to state monopoly entities, leaving no practical access path for private platforms.
Japan: workarounds instead of integration
Japan, in the report’s telling, has moved through regulatory workarounds rather than formal legal integration.
Local platforms use a mechanism likened to the “three-shop system” associated with the pachinko industry, designed to break the direct cash flow inside the operator’s structure.
- The platform operator blocks direct cash deposits and instead runs a free reward model based on activities such as watching advertisements. It also removes any on-platform cash redemption function, with the goal of stripping out the “gain or loss of property” element used in gambling definitions.
- A third-party reward issuer, separate from the platform, grants rewards such as gift certificates to successful participants. By separating the platform operator from the issuing entity, the structure reduces the risk that the operator becomes a direct party to cash redemption.
- Outside the platform, peer-to-peer transfer markets and affiliated merchants form an ecosystem in which rewards are actually used or converted into cash. Because the platform does not take part in that distribution process, the legal separation is preserved.
Tiger Research says this is still an informal business practice in a gray area, not a durable structure grounded in firm legal foundations. Global platforms are either blocked from Japan or operate through crypto exchanges under tight restrictions. In terms of policy discussion, the report says Japan is not materially ahead of South Korea.
Offshore activity is already large enough to matter
The report stresses that the absence of a legal framework does not mean the market is absent.
It points to more than $52 million in liquidity, or about KRW 72.8 billion, tied to prediction markets around South Korea’s June 2026 local elections. In Tiger Research’s view, that shows user participation on offshore platforms has already crossed a meaningful threshold even without domestic regulation.
Those transactions sit outside the tax system, the report says. They also lack consumer protection and make market integrity supervision effectively impossible.
Regulators, in its view, have three broad options:
- Expand existing criminal rules and impose sanctions, which the report describes as the path South Korea currently resembles.
- Use technical tools to block platform access entirely, which it describes as the Singapore model.
- Bring prediction markets into regulation and gain tax revenue and supervisory authority in the process.
Tiger Research says only the third route can directly achieve practical regulatory goals such as tax collection, consumer protection, and market transparency.
For scale, the report estimates that global annual prediction market trading volume will exceed $200 billion in 2026. Under a conservative assumption that Korean users account for 1% of that total, the attributable volume for a given Asian market would reach $2 billion. Depending on the tax model used, that would generate an estimated $4 million to $43.2 million in new annual tax revenue.
The larger point, the report says, is not the size of those numbers by itself. If regulation does not adapt, the trades will not disappear. They will continue in unregulated settings, leaving regulators to surrender tax and supervisory control while still paying the administrative and criminal enforcement costs.
Three policy routes for Asia
Tiger Research lays out three ways regulators could rebuild their approach to prediction markets.
1. Use gambling regulation
This path would adapt existing Asian models for state-approved speculative activity, such as sports betting pools or integrated resort casinos. The report says it fits the logic of state monopoly structures and can be justified through public-funding rationales, but it has built-in limits when applied to the business model of private platforms.
2. Use derivatives regulation
The report presents this as the least friction-filled and most operationally workable route. It would require adjusting financial product definitions, drawing on precedents such as the acceptance of non-financial variables under Japan’s Financial Instruments and Exchange Act or the “economic risk” language in South Korea’s Capital Markets Act.
This route, Tiger Research says, avoids a direct collision with state gambling monopolies while addressing concerns around speculation and manipulation by limiting eligible underlying assets to publicly verifiable statistical variables.
3. Create a standalone third category
The third option would follow Gibraltar and design dedicated legislation specifically for prediction markets. The report says that approach allows the most precise regulatory calibration, but it also carries the highest legislative and political cost because there are few usable precedents.
The report says the missing piece is public deliberation
Tiger Research does not present any of these routes as a near-term result. In many Asian jurisdictions, it says, basic public discussion about the legal identity of prediction markets has not even formed.
Before lawmakers can build momentum for any of the three paths, the report argues, governments need public deliberation processes and broader social consensus around the value of prediction markets. Across Asia, the concept remains unfamiliar, and no actor has yet taken the lead in shaping the surrounding public discourse. As a result, even the most basic agenda items have not reached policy tables.
The report calls for a formal public forum, such as public-private roundtables organized around the core classification questions, to examine how prediction markets actually function. It also says specialist research groups such as Limitless Research could play an important role if they can demonstrate the reliability and public value of data-driven forecasting models.
Tiger Research ends on a narrow point rather than a broad claim. Prediction markets carry clear benefits and risks, it says, but reaching an institutional conclusion before the debate has even happened would skip the central issue. What is needed now is a constructive discussion that has not yet taken place.