Prediction Markets Face Regulatory Storm, Insider Trading Risk at SBC Summit

Prediction market executives warned of a looming regulatory crackdown and potential insider trading scandals during discussions at the SBC Summit in Lisbon.

"The resiliency of prediction markets is going to outlast the legislative and the judicial storm that’s coming our way," said John Aristotle Phillips, CEO of Aristotle, the company behind PredictIt.

Phillips predicted a major insider trading scandal, either involving finance or sports, would cause huge problems for the sector in the near future.

"There is going to be a bust before a boom," he said.

Joey Levy, however, argued the boom is already underway, citing the high valuations of firms like Kalshi and Polymarket, but said the upcoming U.S. Supreme Court decision will be the true test.

"I don’t think anybody truly knows where SCOTUS is going on this," Levy said.

Kalshi's Chief Risk Officer, Udesh Jha, revealed the firm is in talks with European regulators like ESMA but does not expect to fully enter the EU market soon due to fragmented rules.

"We would love to," Jha said.

"We are talking to regulators across the pond like ESMA and others. You can’t get the regulation clarified in one go, it’s going to be a process."

Jha explained Kalshi waited years for clear U.S. regulation before launching, preferring federal oversight to a patchwork of state rules.

Pedro Mendez de Vigo, Head of Legal at Crypto.com, noted the CFTC's regulation in the U.S. trumps any state-by-state rules.

Matchbook CEO Ronan McDonagh discussed his company's recent deal with ADI Predictstreet, which provided access to the UK market ahead of the 2026 World Cup.

"ADI Predictstreet brought value to us, but we also brought value for them as we gave them established access to the UK market," McDonagh said.

Yoni Sidi, CEO of Winpot.mx, highlighted the challenge of retaining customers after the 2026 World Cup in Mexico, urging authorities to consult operators on legal updates.

"To get them to come to play with you at the World Cup wasn’t the difficult part," Sidi said.

"The real work starts after the final whistle of the final, and that is maintaining the customer and making sure they can stay with you for a long period of time."

In a panel on fraud, Mario Cardoso, Fraud and Risk Manager at Solverde.pt, argued operators should focus on catching fraudsters rather than stopping promotions.

Rahul Das, Management Consultant at Spyglass Insights, cautioned that AI for fraud prevention is only as good as the data it uses.

The event concluded with the SBC First Pitch contest for startups, won by AI-powered competitive intelligence platform Gmonitor, which received a prize package worth over €100,000.