Jurisdictional Risk Research — Sportsblock Prediction Markets

⚠️ NOT LEGAL ADVICE

This document is founder research based on publicly-available primary sources. It is a good-faith attempt to map the regulatory surface, not a legal opinion. No specialist counsel has been engaged at time of writing. Any user, investor, or regulator reading this should treat it as our stated risk posture — not as guaranteed-accurate legal analysis.

Re-engagement trigger: engage specialist gambling / securities counsel on (a) first VC conversation, (b) regulator contact, (c) when we enable MEDALS → fiat off-ramp, or (d) MAU > 10,000 active predictors. See deferred-controls.md for the full list.

Last updated: 2026-04-28 Owner: founder (Paul Blanche)

What Sportsblock does (regulatory-relevant summary)

Sportsblock runs two mechanisms that involve real-value on-chain tokens (MEDALS on Hive Engine):

Prediction markets — users stake MEDALS on the outcome of sports events. Payouts are pari-mutuel (winners split the losing pool, no house take beyond a platform fee). Staking requires a "stake token" issued only after pre-deposit into an escrow account.
Contests — skill-based competitions (IPL Boundary BlackJack, Last Man Standing, Higher-or-Lower) with either free or paid entry. Prize pools are either sponsor-funded (fixed) or fee-funded.

Important distinctions vs. traditional sportsbooks:

No fiat off-ramp today. MEDALS cannot currently be withdrawn as cash or wired anywhere. This is a hard invariant — see the "Guard this rule" note in the readiness plan.
No house book. The platform is not a counterparty. In predictions, it's purely pari-mutuel among users. In contests, payouts come from a predefined pool (sponsor or collected entries).
No odds-setting. The platform does not set odds or accept lay bets. Odds emerge from the relative stake volumes on each outcome.
Blockchain-native. All stakes and payouts are recorded on Hive. MEDALS is a Hive Engine token with a real (though illiquid) market price.

These traits matter because most gambling-law regimes were drafted before tokenised peer-to-peer markets existed, and some of our traits (no house, no fiat off-ramp, skill component) put us outside the strictest "gambling" definitions — in some jurisdictions. In others, any real-value outcome-based staking is gambling, full stop.

Classification uncertainty

In the absence of counsel, we treat MEDALS prediction markets as potentially regulated gambling in most jurisdictions and conservatively block anywhere with explicit sports-betting / prediction-market laws that we can't confidently classify ourselves as outside of.

Possible classifications we've encountered in the primary sources:

(a) Regulated gambling / sports betting — most restrictive. Requires a licence in most English-speaking jurisdictions.
(b) Financial instrument / derivative — some regulators (SEC, CFTC, CySEC, FCA) have ruled prediction markets are swaps / security-based swaps. Opens securities / derivatives regulation.
(c) Skill contest / game of skill — some jurisdictions (e.g. India for fantasy sports, UK for some skill games) explicitly carve out skill-based contests from gambling law.
(d) Social / play-money / loyalty token — the most permissive interpretation. Usually requires zero fiat interoperability, which we satisfy today but may not long-term.

We don't know for certain which applies to any given jurisdiction. We block any jurisdiction where the strictest interpretation (a) or (b) would apply and we can't confidently argue (c) or (d).

Jurisdiction classifications

🔴 Blocked — explicit high-risk

Currently empty by product decision (2026-04-28). No jurisdiction is geo-blocked at the route layer today. The infrastructure (BLOCKED_COUNTRIES in src/lib/compliance/geo-gate.ts, plus the checkGeoOrBlock guards on money-moving routes) is retained so a country can be re-added without re-wiring anything.

Historically blocked jurisdictions (US, CN, IN, SG, TH, AE, SA, IR, KP, CU, SY, RU, BY, VE) are now allowed under the same disclaimer terms as everywhere else. Re-engagement triggers in deferred-controls.md still apply — if a regulator contacts us about any of these, we re-block immediately while engaging counsel. OFAC sanctions still apply at the user level (see AML section); they are not enforced via geo-gate today.

🟡 Allowed with disclaimer

Users here can stake/enter but see the risk disclaimer + age gate on first attempt. No specific licence required under our good-faith reading of primary sources, but the legal position is not certified.

Jurisdiction	Primary source	Our position
United Kingdom	Gambling Act 2005, Gambling Commission guidance on "remote gambling"	The Act requires a licence for remote gambling services "advertising into or from" Britain. Counsel-level question: does a token-based P2P market fit the Act? We don't advertise in the UK, don't take fiat, and users who stake are themselves the counterparties. Until counsel advises, we run with disclaimer only — flip to blocked the moment a UK GC inquiry arrives.
European Union (all member states)	Per-country gambling laws (e.g. Malta Gaming Authority, French ARJEL/ANJ, German Glücksspielstaatsvertrag 2021)	Gambling is member-state-level, not Brussels-level. Most member states require local licensing for real-money gaming. We rely on the "we are not gambling in the regulated sense" argument: no house, no fiat, no odds. Counsel may disagree per member state — if so, the worst-case pivot is to block specific countries and continue in the rest.
Canada	Criminal Code s. 206, provincial licensing via [AGCO, BCLC, etc.]	Federally criminalised except under provincial licence. Currently rely on the "game of skill / no house" argument. Conservative counsel would block Canada too — flagged for review.
Australia	Interactive Gambling Act 2001, Australian Communications and Media Authority	Blanket prohibition on "prohibited interactive gambling services" offered to Australian customers. The Act has exemptions for some skill-based contests. Counsel-level question. Allowed with disclaimer for now.
Brazil	[Lei nº 14.790/2023 on fixed-odds sports betting]	New sports betting framework came into force 2024. Prediction markets on token systems not explicitly addressed. Allowed with heavy disclaimer; monitor for explicit guidance.
Rest of world	N/A	Default-allow unless we learn otherwise, with risk disclaimer + age verification.

🟢 Allowed

No jurisdiction is "allowed" without disclaimer — every user must ack the risk disclaimer before first stake/entry. The allow-with-disclaimer list above is the default permissive state.

Enforcement implementation

Geo-gate: src/lib/compliance/geo-gate.ts reads x-vercel-ip-country (a trusted header set by Vercel's edge network). Country codes in the blocked list return HTTP 451 with a link to this doc.
Not perfect: VPN / proxy users can bypass. We are not running commercial geo-fence / KYC services. This is founder-managed conservative blocking, not fraud-proof.
Scope: applies only to money-moving routes (stake confirm, contest entry confirm, HOL join confirm). Reading / browsing / posting is unrestricted so a misplaced traveller isn't locked out of the whole site.
Response to inquiry: if a regulator contacts us regarding a specific jurisdiction we haven't blocked, we add that jurisdiction to the blocked list immediately and pull the product from that geography while engaging counsel.

Open questions for counsel (when engaged)

Does MEDALS' secondary-market price (Hive Engine market) make it a "security" under the Howey test (US) or similar elsewhere?
Is pari-mutuel without a house genuinely distinguishable from regulated sports betting under the EU member-state frameworks?
Do we need money transmitter licensing anywhere as a custodial-account operator (sp-predictions Hive account)?
Once we add MEDALS → fiat off-ramp, which jurisdictions require VASP registration / MSB licensing / VARA registration?
Is blanchy (the founder / on-chain custodial-account operator) personally liable if escrow funds are mishandled? We should run the entity separately.
Does the "contest" framework (IPL BB, LMS, HOL) — which involves explicit skill prediction — qualify for skill-game carve-outs that the prediction-markets framework does not?

Change history

Date	What
2026-04-17	v1 — initial founder research, conservative blocking posture
2026-04-28	v2 — `BLOCKED_COUNTRIES` emptied. No jurisdiction blocked at the geo-gate layer. Disclaimer + age gate remain. Infrastructure retained for fast re-block on regulator contact.

Amendments require a new entry in this table + a PR update to src/lib/compliance/geo-gate.ts if the blocked list changes.