ASIC questions whether retail prediction markets serve the public interest

Australia’s corporate regulator has warned that retail prediction markets may not be in the public interest, saying their all-or-nothing structure and focus on events such as weather and sport make them resemble wagers rather than investments. In a statement posted on Friday, Australian Securities and Investments Commission (ASIC) chair Sarah Court said the products shared features with binary options, which are banned for retail clients in Australia. Court also cautioned that offshore platforms do not provide direct users with protections under Australian law. Australian licence holders that facilitate access to those platforms must still meet their regulatory obligations.

ASIC’s consumer guidance said no prediction market operator is licensed as a financial market in Australia. It highlighted risks including the potential use of confidential information, disputes over how an event is resolved and the absence of dispute-resolution processes and client-money safeguards on unlicensed offshore platforms. The regulator’s position is linked to section 798A of the Corporations Act, which requires ASIC to consider the public interest when deciding whether to grant an Australian market licence. When checking its site, iGB confirms that Polymarket has listed Australia as one of its blocked countries. According to a January update, Kalshi too lists the country as a restricted jurisdiction.

A ban on issuing and distributing binary options to retail customers took effect on 3 May 2021 and was later extended to 1 October 2031. The regulator said that in the 13 months before the original ban, between 74% and 77% of active retail clients lost money, with combined losses of $14 million.

This summer, nine European authorities announced a joint initiative targeting unlicensed prediction market platforms across the continent. Regulators from Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain and Switzerland have pledged enhanced cross-border cooperation to tighten oversight of the rapidly expanding vertical. ASIC’s statement does not amount to a formal ruling on every prediction-style product. However, it sets out the regulator’s current concerns and indicates that any future application for a market licence would be assessed against the public-interest test.