Australia's corporate regulator has expressed concerns that retail prediction markets may not serve the public interest. The Australian Securities and Investments Commission (ASIC) issued this warning, noting that the "all-or-nothing" structure of these markets, which often focus on events like sports and weather, makes them more akin to gambling than legitimate investments.
In a statement released on Friday, ASIC chair Sarah Court highlighted similarities between these products and binary options, which are prohibited for retail clients in Australia. Court raised further concerns regarding offshore platforms, emphasizing that users on these platforms do not receive the protections afforded by Australian law. Australian license holders that provide access to these offshore services still bear an obligation to adhere to regulatory requirements.
ASIC's consumer guidance indicates that no current prediction market operator is licensed as a financial market within Australia. The regulator outlined risks associated with these markets, including potential misuse of confidential information, disputes about event outcomes, and a lack of safeguards for client funds on unlicensed offshore platforms.
This scrutiny is related to section 798A of the Corporations Act, which obligates ASIC to evaluate the public interest when considering applications for Australian market licenses. Reports from industry sources, such as iGB, confirm that platforms like Polymarket have blocked Australia from their services. Additionally, Kalshi has identified Australia as a "restricted jurisdiction" in its updates from January.
ASIC's recent warning is set against the backdrop of its previous actions concerning binary options. A ban on these products targeting retail customers was implemented on May 3, 2021, and extended to October 1, 2031. The regulator revealed that in the 13 months preceding the initial ban, approximately 74% to 77% of active retail clients incurred losses, totaling around $14 million.
The statement from ASIC coincides with a shifting regulatory landscape for prediction markets by gambling authorities in Europe. Recently, nine countries—including Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and Switzerland—collaborated on a joint initiative to monitor unlicensed prediction market platforms in their territories.
While ASIC's notice does not constitute a formal ruling on every prediction-style product, it articulates the regulator's current apprehensions. Any future applications for market licenses will be analyzed in light of the public interest standard.
