Issue link: https://maltatoday.uberflip.com/i/1544987
21 maltatoday | SUNDAY • 17 MAY 2026 FEATURE prediction markets are pricing Malta's election ELECTION 2026 "Technically, anyone in Mal- ta can place bets and poten- tially win significant amounts," the source said. Even if Malta moved to block the site, en- forcement would be limited. A VPN easily bypasses any coun- try-level block, and because the platform runs on cryp- to rather than conventional banking infrastructure, which would be far easier to control, restrict and shut down, tradi- tional financial restrictions do not apply. What the numbers mean and what they don't Economist JP Fabri says pre- diction markets work because they pull together dispersed information. "Thousands of participants, each carrying fragments of knowledge, sen- timent, instinct, or analysis, contribute to a collective fore- cast," he says. Research suggests that in many cases, prediction mar- kets have outperformed polls and expert forecasts; one me- ta-analysis found them to be on average 79% more accurate than alternative approaches. But the Malta numbers come with warnings. The market is small and dominated by in- ternational traders who may know little about Maltese pol- itics. More importantly, Fab- ri argues that these markets do not just reflect what peo- ple think; they can shape it. "When voters repeatedly see one candidate trading at a high probability, that can influence perceptions of viability, mo- mentum, and even legitimacy," he said. Whether that shifts votes is unclear, but Fabri believes the amplification effect is real, particularly in tight races. The manipulation problem On a small, thinly traded market like Malta's, moving the odds is not difficult. "On a thin market with low liquidity, it would actually be quite easy to move the odds in the short term, precisely because there are fewer participants on the other side to absorb a large bet," the educator says. This has already happened on Polymarket's biggest stage. During the 2024 US presiden- tial election, a single trader, later identified as a French na- tional, moved Donald Trump's odds significantly through a series of large bets. The plat- form also faced allegations of wash trading during the same period. On a market the size of Malta's, the self-correct- ing mechanism that normally keeps prices honest is much weaker. Most internation- al traders do not care enough about Maltese politics to push back against a suspicious bet. The trades are also essen- tially anonymous. All that is visible on the blockchain is a wallet address. Polymarket in- troduced identity verification for US users in late 2025 in re- sponse to regulatory pressure, but outside the United States, the default remains permis- sionless. Fabri says this is where the real danger lies, not manipu- lation of the odds themselves, but the use of skewed odds to shape how journalists and vot- ers read the race. A manipulat- ed market that gets reported as fact is far more damaging than one that traders quietly cor- rect. Can Malta regulate this? The regulatory question is one that jurisdictions across the world are still working through. Are prediction mar- kets gambling products, finan- cial instruments, or something new entirely? The answer mat- ters because the two regulato- ry frameworks are completely different. Gambling regulation focuses on consumer protec- tion. Financial regulation fo- cuses on market integrity, ma- nipulation, and transparency. Prediction markets sit uncom- fortably between both. Malta has more experience than most European countries in working through that ques- tion. It helped pioneer online gaming regulation in the early 2000s and introduced one of the EU's first comprehensive frameworks for blockchain and digital assets in 2018. Fabri believes that gives Mal- ta a head start, but only if it treats prediction markets as something genuinely new rath- er than just another form of iGaming. "If Malta can com- bine its gaming heritage with its fintech ambitions, it could become one of the first juris- dictions in Europe to build a credible regulatory model," he said. That would mean clear prod- uct classification, identity ver- ification, anti-manipulation rules, and strict boundaries around politically sensitive contracts, including, potential- ly, disclosure requirements for large traders during election periods. The source takes a broader view on where this is head- ing, "This is the future of pre- diction markets, the future of gambling, and it is the future of money. More businesses, ser- vices, and products will start accepting crypto because it is simply a cleaner approach." Three weeks out For now, the Malta election markets remain small and largely unknown to most vot- ers, but the direction of travel is clear. Prediction markets are growing fast, and the questions they raise about democratic processes are not going away. Fabri does not think banning them is the answer. Used re- sponsibly, they can be useful too, a complement to polling data rather than a replacement for it, but a market with anony- mous traders, no manipulation safeguards, and no accounta- bility to the democratic pro- cess, its pricing is a different matter. "When markets begin to in- fluence democratic narratives without public accountability," he says, "that is where the real risk begins."