Australia’s corporate regulator is raising concerns about retail prediction markets, suggesting they may not align with the public interest. This warning comes from the Australian Securities and Investments Commission (ASIC), which pointed out that the all-or-nothing nature of these markets, often centered around events like weather and sports, makes them more akin to gambling than legitimate investments.
In a statement released on Friday, ASIC chair Sarah Court highlighted the similarities these products have with binary options, which are prohibited for retail investors in Australia. Furthermore, she expressed concerns about the lack of protections for users on offshore platforms, stating that Australian license holders facilitating access to these venues must still adhere to local regulatory standards.
ASIC's guidance underscores that no prediction market operator currently holds a license as a financial market in Australia. Among the risks identified are issues relating to the potential for misuse of confidential information, disputes surrounding the resolution of events, and the absence of dispute resolution procedures and client-money protections on unregulated offshore platforms.
This stance aligns with section 798A of the Corporations Act, which obliges ASIC to evaluate public interest when deliberating the granting of an Australian market license.
Checking their website, iGB confirms that Polymarket has blocked users from Australia. Similarly, as of January, Kalshi has categorized the country as a “restricted jurisdiction.”
ASIC's warning comes in the context of its previous actions concerning binary options. A ban on the issuance and distribution of these products to retail customers initiated on May 3, 2021, has been extended to last until October 1, 2031. Statistics indicated that in the 13 months leading up to the ban, 74% to 77% of active retail clients incurred losses, summing up to $14 million.
This statement by ASIC is reflective of a broader shift in the regulatory stance towards prediction markets. Earlier this summer, nine European regulatory authorities launched a unified initiative aimed at monitoring unlicensed prediction market platforms throughout Europe. Countries involved—Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and Switzerland—have committed to enhanced cooperation to improve oversight of this rapidly evolving sector.
While ASIC's pronouncement does not constitute a formal judgment on all prediction market products, it does outline the regulator's apprehensions. This suggests that any future requests for a market license will undergo scrutiny against the public interest criteria.
