The Australian Securities and Investments Commission (ASIC) has raised concerns that retail prediction markets may not align with the public interest. Notably, ASIC’s chair Sarah Court pointed out that these markets resemble wagers rather than genuine investments, particularly due to their all-or-nothing nature and focus on events such as sports and weather.
In a statement released on Friday, Court highlighted the products' similarities with binary options, which are already prohibited for retail clients in Australia. She emphasized that users on offshore platforms are not protected by Australian law, although license holders facilitating access to these platforms remain obligated to adhere to regulatory requirements.
ASIC’s guidance noted that there is currently no operator licensed as a financial market for prediction markets in Australia. It warned of various risks including potential misuse of confidential information, disagreements over event outcomes, and the absence of client safeguards and dispute resolution processes on unregulated offshore platforms.
This scrutiny is rooted in section 798A of the Corporations Act, which mandates that ASIC weigh the public interest in its decisions regarding Australian market license applications. According to information from iGB, platforms like Polymarket have identified Australia among their blocked countries, and Kalshi has similarly described the country as a “restricted jurisdiction.”
ASIC’s warning stems from its previous actions regarding binary options. A ban on issuing these products to retail customers came into force on May 3, 2021, and has been extended until October 1, 2031. The commission noted that between 74% and 77% of active retail clients lost money in the 13 months leading up to the initial ban, with total losses amounting to $14 million.
This announcement from ASIC coincides with a shifting regulatory landscape for prediction markets across Europe. Recently, nine European regulatory bodies embarked on a collaborative initiative aimed at addressing unlicensed prediction market platforms continent-wide. Authorities from Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and Switzerland have committed to enhancing cross-border cooperation to better regulate this swiftly evolving sector.
While ASIC’s statement does not serve as a definitive ruling on all prediction-style products, it effectively outlines the regulator’s current apprehensions and suggests that any future applications for market licenses will undergo scrutiny against public interest criteria.
