Executive Summary
This case study examines the rise of geopolitical prediction markets like Polymarket and Kalshi, their regulatory status in Singapore, potential impacts on the nation, and policy recommendations. While these platforms claim to aggregate collective wisdom on future events, they pose unique challenges for Singapore’s social cohesion, national security, and regulatory framework.
1. Background: The Global Phenomenon
What Are Geopolitical Prediction Markets?
Geopolitical prediction markets allow users to bet real money on specific political and security outcomes. As of January 2026, platforms like Polymarket and Kalshi have facilitated over $110 million in wagers on questions ranging from “Will the U.S. invade Venezuela?” to “Will Israel strike Iran by January 31, 2026?”
These markets operate on binary outcome principles where participants buy “yes” or “no” shares on specific events. Share prices reflect the crowd’s collective assessment of probability, creating real-time forecasting mechanisms.
The Appeal
Prediction markets gained mainstream attention following accurate forecasts of the 2024 U.S. Presidential Election and the capture of Venezuelan leader Nicolás Maduro. Unlike traditional geopolitical hedging through stocks or commodities, these platforms offer direct event-specific betting with potentially lucrative returns on long-shot outcomes.
2. Singapore’s Regulatory Response
Current Legal Status
Singapore has taken a firm stance against prediction markets. As of January 12, 2025, the Gambling Regulatory Authority (GRA) officially banned Polymarket, classifying it as an illegal gambling site. Users attempting to access the platform receive warnings that participation carries penalties of up to SGD $10,000 in fines, six months imprisonment, or both.
Legal Framework
The Gambling Control Act 2022 provides the legislative basis for this prohibition. The Act adopts an expansive, technology-neutral definition of “betting” that encompasses wagering on “the outcome of a race, competition, sporting event or other event or process.” This broad language captures prediction markets regardless of how operators frame their services.
Singapore only permits online gambling through state-licensed platforms like Singapore Pools, maintaining strict control over gambling activities to prevent social harm and ensure regulatory oversight.
Rationale for the Ban
Singapore’s prohibition reflects several concerns:
- Gambling harm prevention: Protecting citizens from addiction and financial loss
- Regulatory control: Maintaining oversight of financial speculation
- Market integrity: Preventing manipulation and ensuring fair outcomes
- National security: Avoiding markets that could incentivize adverse outcomes
- Social cohesion: Preventing divisive betting on sensitive political events
3. Singapore-Specific Scenarios & Vulnerabilities
Why Singapore Faces Unique Risks
As a small, multicultural city-state navigating great power competition, Singapore would be particularly vulnerable to prediction market dynamics if such platforms were permitted to operate with Singapore-focused contracts.
High-Probability Scenario Categories
A. U.S.-China Strategic Competition
Hypothetical Market Questions:
- “Singapore maintains military cooperation with both U.S. and China through 2027?”
- “Singapore forced to choose sides in Taiwan crisis by June 2026?”
- “Chinese military vessels granted port access to Singapore by December 2026?”
Vulnerabilities: Singapore hosts U.S. military logistics facilities while maintaining an official “One China” policy. The nation imported $24.65 billion from China and exported $45.75 billion to China in 2023, creating deep economic interdependence. Any Taiwan Strait crisis would place Singapore in an impossible position, potentially forcing choices that prediction markets could anticipate and amplify.
B. ASEAN Leadership & Regional Stability
Hypothetical Market Questions:
- “Singapore successfully chairs ASEAN 2027 without major diplomatic incidents?”
- “Myanmar civil war directly impacts Singapore by [date]?”
- “Malaysia-Singapore High-Speed Rail project cancelled again by 2027?”
Vulnerabilities: Singapore will assume the rotating ASEAN chairmanship in 2027, navigating complex flashpoints including Myanmar’s civil war, South China Sea disputes, and U.S.-China competition. Prediction markets on ASEAN’s effectiveness could undermine Singapore’s diplomatic efforts and signal expectations of failure.
C. Economic Hub Competitiveness
Hypothetical Market Questions:
- “Singapore falls out of top 3 global financial centers by 2027?”
- “Hong Kong overtakes Singapore as Asia’s premier finance hub by [date]?”
- “Major MNC relocates regional headquarters from Singapore by year-end 2026?”
Vulnerabilities: Singapore’s prosperity depends on maintaining its status as a global trade and financial hub. Geopolitics and protectionism threaten sea and air route configurations that underpin this position. Prediction markets pricing in Singapore’s decline could become self-fulfilling prophecies as investors and corporations act on market signals.
D. Political Stability & Leadership Transitions
Hypothetical Market Questions:
- “PAP maintains supermajority in next general election?”
- “PM Lawrence Wong completes full term without coalition changes?”
- “Opposition party wins Group Representation Constituency by 2027?”
Vulnerabilities: Singapore’s 4G leadership under Prime Minister Lawrence Wong represents a generational transition. While political stability has been a cornerstone of Singapore’s success, betting markets on domestic political outcomes could polarize society, encourage foreign interference, and undermine confidence in democratic processes.
E. Cybersecurity & Hybrid Threats
Hypothetical Market Questions:
- “Major cyberattack disrupts PSA port operations by Q2 2026?”
- “Foreign disinformation campaign targets Singapore elections?”
- “Singapore experiences terrorism incident by December 2026?”
Vulnerabilities: Hybrid threats combining cyber, disinformation, and physical elements pose acute risks to Singapore’s maritime and digital infrastructure. Phishing and cyberattacks have cost global investors over $55 billion in the past decade. Prediction markets on such events could inadvertently provide reconnaissance value to hostile actors or create perverse incentives.
F. Social Cohesion & Ethnic Tensions
Hypothetical Market Questions:
- “Singapore experiences race-based riots by [date]?”
- “Government invokes Internal Security Act for ethnic conflict by 2027?”
- “Major religious incident requires Emergency powers by [date]?”
Vulnerabilities: Singapore’s ethnic and cultural composition—74% Chinese, 14% Malay, 9% Indian—makes it susceptible to soft power pressure from both China and America. Historical memory of the 1964 race riots remains vivid. Prediction markets on ethnic tensions could exacerbate divisions, normalize conflict expectations, and attract foreign manipulation.
4. Impact Analysis on Singapore
4.1 National Security Impacts
Intelligence & Signaling Risks
Prediction markets aggregate dispersed information, potentially revealing:
- Insider knowledge of upcoming policy decisions
- Military intelligence about regional tensions
- Corporate decisions on relocations before public announcements
- Foreign government intentions toward Singapore
Market movements could inadvertently signal classified information or insider trading based on privileged access to government or military planning.
Incentive Misalignment
Markets create financial incentives for negative outcomes. Individuals or entities with the ability to influence events (insiders, foreign actors) could profit from engineering the very crises they bet on. For a small nation like Singapore, this creates unacceptable vulnerabilities.
Strategic Flexibility Erosion
Singapore’s foreign policy effectiveness depends on strategic ambiguity and flexibility. Public prediction markets would force premature crystallization of probabilities around sensitive choices, constraining diplomatic options and potentially locking Singapore into suboptimal paths based on market expectations.
4.2 Social Cohesion Impacts
Normalization of Conflict
Betting markets on ethnic tensions, riots, or political crises normalize these outcomes as mere probabilistic events rather than catastrophic failures. This cognitive reframing could reduce civic commitment to preventing such scenarios.
Profit Motive Corruption
Singapore’s social compact emphasizes collective welfare over individual gain. Allowing citizens to profit from national misfortune directly contradicts this ethos and could erode the shared sacrifice mentality that has enabled Singapore’s success.
Foreign Interference Vector
External actors could manipulate prediction markets to:
- Create false signals about Singapore’s stability
- Amplify social divisions by betting on conflict scenarios
- Undermine confidence in institutions through price manipulation
- Spread disinformation validated by “market consensus”
Singapore’s multicultural society, while a strength, also creates vulnerabilities to external actors seeking to exploit ethnic or religious fault lines through market-based psychological operations.
4.3 Economic & Financial Impacts
Capital Flight Signals
Prediction markets pricing increased risks to Singapore’s stability or hub status could trigger:
- Preemptive capital outflows as investors hedge
- Corporate relocation decisions based on market probabilities
- Increased borrowing costs as risk premiums rise
- Self-fulfilling prophecies of decline
Regulatory Arbitrage
If Singapore permitted such markets while regional competitors banned them, Singapore could become a haven for geopolitical speculation, attracting unwanted attention and potentially conflicting with its reputation as a responsible financial center.
Market Manipulation
Small markets are easily manipulated. Wealthy individuals or state actors could move prices to create false signals, manipulate public perception, or profit from insider information, undermining market integrity.
4.4 Governance & Policy Impacts
Policy Paralysis
Governments may become reluctant to make difficult but necessary decisions if prediction markets immediately price in political costs or short-term negative consequences, privileging market sentiment over long-term national interest.
Democratic Legitimacy
Prediction markets create parallel accountability structures. If markets consistently price government failure or policy ineffectiveness, they undermine democratic legitimacy and create perception gaps between official positions and market-based “reality.”
Crisis Amplification
During actual crises, prediction markets could amplify panic and volatility by providing real-time probability updates that feed media cycles and public anxiety, making crisis management more difficult.
5. Outlook: Future Scenarios for Singapore
Scenario A: Status Quo Maintenance (60% Probability)
Singapore maintains its current ban on prediction markets while neighboring countries adopt similar prohibitions. Regional cooperation through ASEAN strengthens regulatory frameworks against unregulated gambling platforms. Singapore’s position as a stable, predictable hub remains intact.
Key Indicators:
- Continued GRA enforcement against offshore platforms
- Regional regulatory harmonization through ASEAN frameworks
- Limited public demand for access to prediction markets
- Effective blocking of VPN-based access
Risks:
- Singaporeans access offshore platforms via VPNs despite prohibition
- Regulatory arbitrage as other jurisdictions become prediction market hubs
- Singapore perceived as overly restrictive compared to innovation-friendly competitors
Scenario B: Selective Liberalization (25% Probability)
Singapore introduces a highly regulated prediction market framework limited to specific non-sensitive categories (sports, entertainment, non-security economic indicators) through Singapore Pools or a licensed operator. Geopolitical, national security, and domestic political betting remains strictly prohibited.
Key Indicators:
- Government study or consultation on regulated prediction markets
- Singapore Pools expansion into new betting categories
- International precedents of successful regulated frameworks
- Fintech industry lobbying for innovation space
Risks:
- Difficulty maintaining categorical boundaries between permitted and prohibited markets
- Scope creep toward more sensitive political and security topics
- Regulatory capture by commercial interests
- Public confusion about acceptable betting categories
Scenario C: Forced Adaptation to Regional Reality (10% Probability)
Widespread adoption of prediction markets in Southeast Asia creates regional norms that pressure Singapore to reconsider its position. Hong Kong or other competitors leverage prediction market permissiveness to attract fintech companies and innovation, forcing Singapore to respond.
Key Indicators:
- Hong Kong, Dubai, or other financial centers become prediction market hubs
- Significant fintech investment flows to markets with permissive frameworks
- ASEAN members adopt varied approaches creating regulatory fragmentation
- Singaporean companies relocate to access prediction market opportunities
Risks:
- Race to the bottom on gambling regulation
- Legitimization of betting on sensitive national security scenarios
- Erosion of Singapore’s regulatory reputation
- Social harm from expanded gambling access
Scenario D: Crisis-Driven Crackdown Expansion (5% Probability)
A major incident—foreign interference in elections via prediction markets, market manipulation causing financial panic, or betting-incentivized violence—prompts Singapore to expand restrictions beyond prediction markets to other forms of speculative activity and increase penalties dramatically.
Key Indicators:
- Documented foreign interference through prediction markets in Singapore or regionally
- Market manipulation causing measurable economic harm
- Public backlash against gambling expansion
- Regional security crisis linked to prediction market activity
Risks:
- Overreach constraining legitimate financial innovation
- Damage to Singapore’s reputation as business-friendly
- Brain drain as fintech talent seeks more permissive environments
- Tension with international financial integration
6. Solutions & Policy Recommendations
6.1 Maintain Prohibition on Sensitive Categories (Priority 1)
Recommendation: Singapore should maintain and strengthen its ban on prediction markets for:
- National security events (military conflicts, terrorism, cyberattacks)
- Domestic political outcomes (elections, leadership changes, policy decisions)
- Social cohesion threats (ethnic tensions, riots, religious conflicts)
- Diplomatic relations and foreign policy choices
Implementation:
- Explicit legislative language defining prohibited categories
- Enhanced GRA enforcement capabilities including blockchain tracking
- International cooperation on cross-border enforcement
- Public education on legal risks and penalties
Rationale: These categories pose unacceptable risks to national security, social cohesion, and governance effectiveness that outweigh any informational benefits.
6.2 Regional Regulatory Coordination (Priority 1)
Recommendation: Singapore should lead ASEAN efforts to establish common frameworks for addressing prediction markets, particularly those involving regional security scenarios.
Implementation:
- Propose ASEAN working group on emerging gambling technologies
- Share intelligence on offshore operators targeting Southeast Asian users
- Develop model legislation for member states
- Create enforcement cooperation mechanisms
Rationale: Unilateral action is insufficient when platforms operate globally. Regional coordination increases effectiveness and prevents regulatory arbitrage.
6.3 Research & Monitor (Priority 2)
Recommendation: Establish a dedicated government unit to monitor global prediction market developments, assess risks, and evaluate potential limited applications.
Implementation:
- Create interagency task force (GRA, MAS, MHA, MFA, MINDEF)
- Commission academic research on prediction market impacts
- Engage international regulatory bodies and peer jurisdictions
- Develop early warning systems for Singapore-focused markets
Rationale: Maintain situational awareness and adaptive capacity as technologies and markets evolve.
6.4 Controlled Experimentation Framework (Priority 3)
Recommendation: If future conditions warrant, consider highly limited pilot programs for non-sensitive prediction markets under strict oversight.
Possible Scope:
- Sports outcomes (already permitted through Singapore Pools)
- Entertainment awards and non-political cultural events
- Specific economic indicators with clear public benefit
- Scientific or technological milestones
Strict Conditions:
- Singapore Pools monopoly or similarly regulated entity
- Mandatory identity verification and betting limits
- Comprehensive gambling harm safeguards
- Regular review and sunset provisions
- Absolute prohibition on expansion to sensitive categories
Rationale: Allows controlled learning while maintaining core prohibitions on high-risk categories.
6.5 Counter Foreign Interference (Priority 1)
Recommendation: Develop capabilities to detect and counter attempts to use offshore prediction markets for information operations or psychological warfare targeting Singapore.
Implementation:
- Monitor offshore platforms for Singapore-focused contracts
- Analyze market movements for indicators of foreign manipulation
- Develop rapid response capabilities to counter false signals
- Integrate prediction market intelligence into national security assessments
- Public communication strategies to contextualize market movements
Rationale: Singapore cannot control offshore platforms but must understand and counter their potential use as influence vectors.
6.6 Public Education & Awareness (Priority 2)
Recommendation: Launch comprehensive public education on the risks of participating in offshore prediction markets.
Implementation:
- Clear communication of legal penalties
- Financial literacy programs highlighting gambling risks
- Case studies of prediction market manipulation and losses
- Youth education on critical evaluation of probability claims
- Integration into national education curriculum
Rationale: Enforcement alone is insufficient. Citizens need to understand both legal risks and the inherent problems with these platforms.
6.7 Industry Engagement (Priority 3)
Recommendation: Engage fintech and blockchain sectors to channel innovation toward productive applications rather than prediction markets.
Implementation:
- MAS sandbox for beneficial forecasting tools (weather, supply chains, non-sensitive economic indicators)
- Clear guidance on permissible vs. prohibited applications
- Support for legitimate business forecasting and risk assessment tools
- Partnership with industry on self-regulation and responsible innovation
Rationale: Prevent brain drain and capital flight by providing legitimate channels for forecasting innovation while maintaining prohibitions on harmful applications.
7. Conclusion
Geopolitical prediction markets represent a novel challenge at the intersection of gambling, financial speculation, national security, and information warfare. For Singapore, the risks clearly outweigh potential benefits.
Core Findings
- Existential Vulnerability: Unlike large nations that can absorb prediction market dynamics, Singapore’s small size and strategic exposure make it uniquely vulnerable to market-driven signaling effects and self-fulfilling prophecies.
- Social Cohesion Threat: Betting on ethnic tensions, political outcomes, or national crises contradicts Singapore’s social compact and could exacerbate existing fault lines.
- National Security Risk: Markets could reveal intelligence, incentivize negative outcomes, and constrain strategic flexibility in ways incompatible with Singapore’s security requirements.
- Regulatory Success: Singapore’s current prohibition is appropriate and effective, though requires continued enforcement and regional coordination.
- Limited Upside: Claims that prediction markets provide superior forecasting are unproven and do not justify the risks for sensitive categories, though limited applications in non-sensitive domains may merit future consideration.
Strategic Imperatives
Singapore must:
- Maintain firm prohibitions on sensitive categories
- Lead regional coordination efforts
- Develop counter-interference capabilities
- Monitor evolving threats and opportunities
- Preserve space for legitimate forecasting innovation
- Educate citizens on risks and responsibilities
The rise of geopolitical prediction markets tests Singapore’s ability to navigate technological change while preserving core national interests. By maintaining clear principles, adaptive capabilities, and regional leadership, Singapore can address this challenge consistent with its values and strategic requirements.
The global experiment with betting on geopolitics is still unfolding. Singapore’s response—firm prohibition grounded in clear rationale—provides a model for other small nations navigating similar dilemmas. As markets evolve and risks crystallize, this principled approach positions Singapore to adapt while maintaining the social cohesion and strategic flexibility essential to its continued success.