All bets are off: navigating event contracts and decentralised prediction markets in the British Virgin Islands

Prediction markets have emerged as one of the most innovative applications of blockchain technology and decentralised finance. They enable participants to trade contracts linked to the outcome of future events, creating new markets for information, risk and speculation. 

As interest in prediction markets grows, questions around their legal and regulatory treatment are becoming more pressing. These issues were discussed at this year’s FinTech on the Seas conference in the British Virgin Islands (BVI), where members of Ogier’s Technology and Web3 team met with founders, developers and service providers to discuss developments in decentralised financial infrastructure. 

For BVI-incorporated entities considering launching or supporting prediction market platforms, a key question is whether these activities are regulated under existing BVI legislation. The answer will always depend on the facts, but the primary pieces of legislation to consider are the Virgin Islands Gaming and Betting Control Act, 2020 (the Gaming Act) and the Securities and Investment Business Act, 2010 (as amended) (SIBA). 

The Gaming Act 

The Gaming Act regulates gaming and betting activities conducted by BVI persons and prohibits participation in the gaming or betting sector without the appropriate licence. Operating without a licence is a criminal offence carrying penalties including fines and imprisonment. 

The legislation extends beyond traditional betting operators. It also captures persons who manufacture, supply or operate gaming software or otherwise provide facilities through which betting activities are carried out. 

Whether a decentralised prediction market falls within the Gaming Act depends principally on the statutory definitions of “gaming” and “betting”. 

The legislation defines: 

• gaming as playing a game for a prize or winnings in money or money’s worth 
• betting as making or accepting, on a fixed-odds or pool betting basis, a bet on the outcome of a horse race, sporting event or lottery draw 

Most prediction market contracts do not fall neatly into either definition. They are unlikely to constitute “gaming” as no game is being played, and they will only constitute “betting” where the underlying event concerns a horse race, sporting event or lottery draw. 

Where those criteria are satisfied, however, the operation of a prediction market platform could fall within the scope of the Gaming Act and require an appropriate licence unless an exemption applies. 

The Gaming Act applies to all BVI companies (and individuals), meaning that activities carried on outside the territory by BVI entities may still be relevant. Although the legislation establishes a licensing framework, the commission responsible for administering the regime is not yet fully operational. This may present practical challenges for businesses seeking licences in the near term. 

SIBA considerations 

Even if the Gaming Act does not apply, operators should also consider SIBA. 

SIBA prohibits persons from carrying on investment business in or from within the BVI without the appropriate licence or exemption. As with the Gaming Act, this analysis may extend to activities conducted outside the BVI, by BVI entities. 

The starting point is whether the relevant event contracts constitute “investments” under SIBA. The legislation contains an exhaustive list of financial instruments, with the most relevant categories being options, futures and contracts for differences. 

Although prediction market contracts are unlikely to constitute options or futures in most cases, some structures may fall within the definition of a contract for differences. Whether that is the case will depend on the precise legal and economic characteristics of the individual contract. 

Particular care should be taken where contracts reference financial markets, indices or other regulated financial products. Depending on the structure of the platform, activities such as operating an investment exchange may require licensing under SIBA. Notably, SIBA contains no exemption for operating an investment exchange, making this an area that warrants careful analysis at an early stage. 

Practical considerations 

The regulatory treatment of decentralised prediction markets in the BVI is fact-specific. Key issues include: 

• the nature of the underlying events 
• the legal rights created by the event contracts 
• whether the contracts constitute financial instruments under SIBA 
• whether any activities fall within the Gaming Act 
• where the relevant entities, operators and participants are located 

Early legal analysis can significantly reduce regulatory uncertainty and assist with structuring platforms in a way that aligns with the applicable legislative framework. 

Looking ahead 

Decentralised Finance (DeFi) presents new opportunities, but the regulatory framework remains grounded in existing law. As discussions at FinTech on the Seas highlighted, prediction markets are moving from concept to application. For those engaging with BVI structures, early clarity on regulatory treatment is essential. Understanding how existing regimes apply in practice can help turn market insight into viable, compliant platforms. 

Prediction markets do not sit neatly within traditional regulatory categories and the BVI is no exception. Existing legislation provides a useful framework for analysis, but important questions remain as the technology continues to evolve. 

For founders, investors and service providers, careful consideration of both the Gaming Act and SIBA will be essential when establishing or supporting prediction market platforms involving BVI entities. As innovation accelerates, legal advice at the structuring stage can help identify potential licensing requirements before they become regulatory issues. Structuring early, with a clear view of how traditional regimes apply to digital models, can help you move forward with confidence. Legal analysis at the outset supports scalable, compliant platforms that align with both innovation and regulation. 

How Ogier can help 

Ogier is the market leader in the BVI for structuring centralised and decentralised Web3 projects, including advising on foundation company set up and operations, Decentralised Autonomous Organisation (DAO) governance and coin and token issuances of all types, as well as providing advice to development teams. We can assist with DeFi projects related to decentralised exchanges and other decentralised protocols and financial platforms. 

Using flexible and innovative structures, we help you launch your new project, advise on your existing operational foundations and DAOs and assist with your token issuances including private and public sales, airdrops and grants of tokens and non-fungible tokens (NFTs). 

We advise and structure the world's largest traditional blockchain development projects and virtual asset businesses including tokenised funds, exchange, lenders, traders, market makers, consultants, brokers, transfer agents and custodians. 

Learn more about our Technology and Web3 expertise. 

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice