Australia's corporate regulator has expressed concerns that retail prediction markets might not be aligned with the public interest. This is primarily due to their all-or-nothing structure and focus on outcomes such as weather and sports, which make them more akin to gambling rather than legitimate investments.
In a statement issued on Friday, Australian Securities and Investments Commission (ASIC) chair Sarah Court noted that these products share characteristics with binary options, which are prohibited for retail clients within Australia.
Court also emphasized that users on offshore platforms lack the protection under Australian law. Australian license holders that facilitate access to such platforms continue to be responsible for adhering to their regulatory obligations.
ASIC's consumer guidance pointed out that no prediction market operator currently holds a financial market license in Australia. The guidance highlights several risks, including the potential for misuse of confidential information, conflicts regarding event resolutions, and the absence of established dispute-resolution mechanisms as well as safeguards for client funds on unlicensed platforms.
This stance is supported by section 798A of the Corporations Act, which mandates ASIC to evaluate the public interest when considering applications for Australian market licenses.
An examination of iGB's site reveals that Polymarket has categorized Australia as one of its blocked countries. In a recent update from January, Kalshi similarly marks the country as a "restricted jurisdiction."
ASIC's warning comes in the wake of measures taken against binary options. A ban on the issuance and distribution of these products to retail customers was enacted on 3 May 2021 and has since been extended to 1 October 2031.
Data indicated that in the 13 months leading up to the initial ban, between 74% and 77% of active retail clients incurred losses, tallying up to $14 million in total losses.
The regulator’s announcement occurs during a period of evolving regulatory responses to prediction markets in the European gambling sector. Recently, nine European regulatory authorities launched a joint effort aimed at unlicensed prediction market platforms, enhancing cross-border collaboration to tighten control over this growing segment.
While ASIC’s statement does not serve as a formal ruling on all prediction-based products, it conveys the regulator's current apprehensions and suggests that any future applications for a market license will be evaluated against the public-interest criteria.
