Bermuda - The offshore hub for prediction markets

• Bermuda has taken early steps among offshore markets to regulate and license a crypto-based prediction market.

• The rise of prediction markets is inevitable, obtaining clarity over the regulatory treatment of the event contracts traded on such markets is paramount.

• Bermuda has shone a torch on the path forward, by licensing the company as a digital asset business derivative exchange provider, it recognises that event contracts are derivatives, not bets or wagers. 

The Bermuda Monetary Authority (BMA) has granted a digital asset business licence to a prediction market provider, marking it as one of the first movers into the regulated offshore market. Prediction markets have seen significant increase in popularity and attention throughout 2025 and into 2026, with institutions like Kalshi and Polymarket dominating headlines. 

Prediction market platforms offer products that in many cases have clear characteristics of traditional derivatives and futures but in others, appear akin to betting products. As the lines can be blurred, regulators and attorneys are required to analyse how event contracts fit within existing legal frameworks.

Bermuda, through the Digital Asset Business Act 2018 (as amended) (DABA), has a well-established and comprehensive regime for digital asset financial services including the activity of a digital asset derivative trading platform. In addition, Bermuda has legislation for the authorisation and control of gaming, betting and lottery style products. 

Against that backdrop, founders considering the launch of prediction markets in or form within Bermuda face two recurring questions:

1. whether operating a prediction market constitutes a regulated digital asset business activity under DABA; and
2. whether event linked contracts could also, or instead, trigger oversight by the Bermuda Gaming Commission (BGC).

This advisory further explores the regulatory treatment of prediction markets and event contracts in Bermuda. 

What is a prediction market?

A prediction market enables participants to acquire exposure to the outcome of a predefined future event through tradable contracts settled on digital asset or fiat rails. Prices fluctuate on the basis of participants' collective assessment of probability relating to the underlying event. For example, an event contract referencing whether Bitcoin exceeds a specified price on a given future date may trade at varying prices as macroeconomic data, regulatory developments, and market sentiment evolve. An event contract referencing a change in weather may fluctuate based on global warming statistics, Paris Agreement goal tracking, political sentiment and global events such as G20 meetings. An event contract tracking a political or sporting outcome, is based on odds of past events and current changes such as reputation or injury. Participants may be able to enter and exit positions throughout the life of the contract, realising gains or losses without holding the event contract until expiry or it may be a 'yes' or 'no' contract with a defined future date.

In short, a prediction market can mean many things which is why the regulatory assessment is by necessity required on each product at a granular level as the products blur historical distinctions between derivatives trading and traditional betting. Market participants now include professional traders, funds, and corporates using event contracts to express views on macroeconomic indicators and hedging trades.

How does Bermuda classify a prediction market?

Under the Digital Asset Business Act 2018 (DABA), operating as a digital asset derivative exchange provider requires a licence and the provider will be subject to the supervision of the BMA. Similarly, arranging deals in investments, requires a licence under the Investment Business Act 2003 (IBA). The BGC, by contrast, regulates:

• casino gaming;
• lottery style games;
• games of chance;
• betting and wagering activities traditionally associated with entertainment/sports gambling.

The key regulatory question relating to predictions markets is therefore critical as to how the traded event contracts should be classified under the above regimes.

Regulators in Bermuda may treat such instruments as:

• digital asset derivatives where the underlying event is the movement of the price of digital assets; 
• investments, where the underlying event is the movement or future price of fiat currency, a commodity, stock or equity;
• a wager (betting) where the underlying event is the outcome of a sports event, for example. 

The classification influences licensing requirements which in turn impacts requirements relating to risk management, disclosure expectations, AML/ATF and cyber security obligations and custody requirements.

Ultimately, the regulatory treatment of prediction markets and event contracts in Bermuda is determined on a case by case basis. Each platform or product must be carefully assessed against the relevant legal and regulatory frameworks, taking into account the specific features and underlying events. 

How we can help

Walkers assisted the first regulated crypto-based prediction market in Bermuda and will continue to assist clients navigate the regulatory perimeter outlined above. We are uniquely placed to advise on the licence required, how to obtain all required licenses and how to implement the regulatory controls and frameworks needed to comply with Bermuda's licensing regimes. For operators, early engagement with the BMA and BGC, supported by careful legal analysis, robust governance, and a clear articulation of how the platform functions is essential to ensuring regulatory clarity and long term success.