Prediction Markets Through the World Cup Lens: Gambling or an Unstoppable Financial Force?
Opinion | July 20, 2026
Author: David Tang, Managing Director, Standard Kepler
Originally published in STHeadline (星島頭條)
Executive Summary
The 2026 FIFA World Cup concluded with Spain defeating Argentina. But another headline caught the author’s attention: according to CryptoBriefing, prediction market trading volume during the World Cup exceeded $50 billion (~HK$390 billion). For comparison, Hong Kong’s derivative warrant market traded HK$116.1 billion in June. As trading volumes grow and regulations mature, prediction markets are undeniably becoming a force that the financial world cannot ignore.
This report explains what prediction markets are, how they differ from gambling, why zero-sum games can still create value, and the regulatory crossroads facing Hong Kong.
What Is a Prediction Market?
For those following fintech or blockchain news, prediction markets are no longer unfamiliar. Simply put, a prediction market lets you vote with real money on whether a future event will happen. The market aggregates everyone’s bets into a price—and that price itself represents the capital-weighted consensus view of the event’s probability.
Example: During the World Cup final extra time, Polymarket’s “Will Spain win?” contract traded at $0.64 for YES and $0.375 for NO. When Spain won, each YES contract settled at $1.00—a $0.36 profit per contract.
Not Gambling—Here’s Why
Prediction markets do attract gamblers, but they differ fundamentally from sports betting:
- No house: Traditional sports betting pits you against the bookmaker, who sets odds mathematically in their favor. Gambling as entertainment is fine; believing you can profit from it is the problem.
- Peer-to-peer: In prediction markets, your counterparty is another participant with a different view. The platform only provides matching services.
- Price discovery: Prices (odds) are determined purely by supply and demand. If everyone favors Spain, YES prices rise and NO prices fall.
How Trading Works: The Three Stages
Using Polymarket as an example, the process divides into three stages:
1. Market Creation
Contrary to popular belief, you cannot simply create any market. To propose a “Will Spain win?” market, you can tweet @polymarket or post in Discord. The team reviews and lists it if approved.
2. Trading
Once listed, trading works like stocks. You can buy YES (bullish) or NO (bearish) at any time. The two options’ prices must sum to $1.00. If YES trades at $0.64, the market is pricing Spain’s win probability at 64% (implied odds of ~1.56x).
3. Settlement (Resolution)
With thousands of markets to resolve, Polymarket uses an oracle mechanism:
- Anyone can propose a settlement by staking $750 as collateral
- A 2-hour challenge window follows; if no one disputes, settlement is automatic and the proposer recovers $750 plus a reward
- If disputed, another $750 stake triggers a second round
- If second-round disputed, a 24–48 hour debate period ensues on Discord’s #evidence-rationale channel, followed by a community vote with results in ~48 hours
Do Zero-Sum Games Have Value?
Yes. Zero-sum means one player’s gain is another’s loss, but zero-sum does not equal zero value.
Futures are zero-sum. Options are zero-sum. Interest rate swaps are zero-sum. Yet they are cornerstones of modern finance. Airlines buy crude oil futures to hedge fuel costs. Both sides of the trade know one will win and one will lose, but the value lies in risk transfer: the buyer locks in future costs; the seller earns compensation for bearing that risk. Both get what they need.
Prediction markets create value in two ways:
1. Quantifying Market Expectations
When you bet real money, your opinion reflects genuine conviction—far more accurate than polls. In the 2024 U.S. election, Polymarket’s predictions proved more accurate than most traditional polls because opinions carried financial cost. The $0.64 price for Spain was the market’s assessed probability of victory—not the true probability, but the best available estimate.
2. Hedging Real-World Risk
Everything that can be bet on can also be hedged. Theoretically, prediction markets allow any uncertainty in the world to be priced. Farmers hedge crop prices with futures; multinationals hedge currency risk with FX contracts. But a cha chaan teng owner wanting to hedge “typhoon impact on business” had no tool—until prediction markets democratized what was once an institutional monopoly.
The Dark Side: Risks and Manipulation
Prediction markets are not without problems:
Price Manipulation
With so many tradable markets, low liquidity makes price manipulation easy.
Insider Trading
The Maduro incident is a classic case. On January 3, 2026, after U.S. forces captured Venezuelan President Maduro, investigators discovered a Polymarket account named “Burdensome-Mix” had precisely bet $32,500 on related markets, profiting $436,000. The account holder was a U.S. special forces soldier who traded using classified military intelligence.
The Assassination Bounty Problem
Consider a market asking “Will Country X’s president die before a certain date?” Someone buys massive NO positions to inflate YES odds. Is this not a disguised assassination bounty? Polymarket’s team reviews markets, but variants like “Will the president step down?” can always circumvent filters.
Until regulators protect participants’ rights, prediction markets will struggle to evolve from “gambling games” into “financial instruments.”
The Boundary with Gambling: Regulatory Logic
Kalshi is the first prediction market approved by the U.S. CFTC, classified as an event contract trading platform. The CFTC’s position is clear: prediction markets are not gambling—they belong in the same category as futures and options, as commodity derivatives. Even within the U.S., this stance faces dissent. But at least prediction markets can operate legally under CFTC oversight.
Europe began regulation last year. Spain, France, Belgium, and Italy have classified Polymarket as an unlicensed gambling platform. Singapore’s Gambling Regulatory Authority (GRA) stated: “Polymarket is an unauthorized illegal gambling service provider in Singapore; participants face fines and imprisonment.”
Hong Kong: Still Watching from the Sidelines
Hong Kong remains in观望 (wait-and-see mode). Fintech is Hong Kong’s most explosive growth industry, with the natural advantage of an international financial center. Clear regulatory direction is what matters—not whether rules are loose or strict. The industry does not fear many rules; it fears unclear rules.观望 is not the problem;观望 without a timeline is.
“If we say one day it’s allowed, the next day it’s not, the day after we say ‘let’s see’—this is the most effective way to kill innovation.”
If Hong Kong truly wants to be an open Asian Web3.0 hub, yet rejects even the world’s most compliant stablecoin (USDC), talent and capital will flow elsewhere: Singapore, Dubai, Tokyo. The world progresses daily; an international financial center’s status retreats if it does not advance. On July 2, 2026, Standard Chartered announced it had become the first global systemically important bank to offer institutional clients USDC minting and redemption services—in Dubai.
Hong Kong’s competitive advantage has never been “regulating nothing” but “regulating what needs regulating, and regulating it professionally.” The CFTC has attempted to place prediction markets under derivatives regulation. Hong Kong can choose to follow: incorporate them into the licensing system, pilot via sandbox. Or choose not to: invoke the Gambling Ordinance and ban them outright. Both paths are reasonable. But standing at the intersection watching indefinitely is the worst choice.
This decision will determine Hong Kong’s position in the future fintech race. The World Cup just ended; Spain was thoroughly deserving. In four years, prediction markets will only be larger. The only question is: will Hong Kong be on the field or in the stands?
Standard Kepler Research | standardkepler.com