ASIC rules prediction markets carry "all the features of a bet"

Australia's Securities and Investments Commission has signalled that prediction markets will remain off-limits for retail investors in the country, with its chair drawing a direct line between the products and gambling.

In a blog post published last Friday, ASIC Chair Sarah Court said the regulator "is not currently convinced that prediction markets for retail clients are in the public interest".

Court said event contracts offered by prediction market operators often "have nothing to do with investment", pointing specifically to sports results as a clear example. She said this raised questions over whether such contracts could properly be called investment products at all, concluding that "prediction market contracts have all the features of a bet".

The intervention, reported by SBC News, lands in the middle of an unresolved global argument over how prediction markets should be classified and who should regulate them.

In the United States, the largest market for these products, the Commodity Futures Trading Commission has backed operators including Kalshi, Polymarket, Crypto.com and Robinhood. State authorities have taken a harder line: Arizona and Utah have both filed criminal charges against Kalshi, which SBC News notes is valued at more than $40bn (£29.8bn).

A small number of jurisdictions have moved to separate prediction markets from gambling regulation altogether. Gibraltar was first to do so, followed by smaller jurisdictions including Tobique in Canada and Nevis in the Caribbean.

Europe's largest markets remain unreceptive. Gambling regulators in France, the Netherlands and Portugal, among others, have voiced opposition to the products, according to SBC News. That has not stopped operators pressing their case: Polymarket, reportedly pursuing a $21bn valuation, has been in contact with the UK's Financial Conduct Authority and the European Securities and Markets Authority in an effort to win greater acceptance across the region.

Court's comments make clear that operators such as Kalshi and Polymarket, which have resisted oversight from gambling regulators, will instead have to satisfy securities regulators like ASIC if they want a foothold in Australia — and for now that looks unlikely.

ASIC's objections extend beyond classification. Court said the regulator views prediction markets as carrying market integrity risks, including the potential misuse of confidential information, market manipulation, and disputes over how the outcome of an event is determined.

She warned Australians who access offshore prediction markets directly online that they "do not have protections under Australian law".

Court also addressed local licensees, saying Australian financial service licensees that facilitate access to offshore prediction markets "should be aware that all their licence obligations under Australian law continue to apply to them in this activity".