ASIC chair says prediction market contracts 'have all the features of a bet', questions retail access in Australia

The Australian Securities and Investments Commission has signalled it is skeptical of prediction markets for retail customers. In a blog post published last Friday, ASIC Chair Sarah Court wrote that the regulator "is not currently convinced that prediction markets for retail clients are in the public interest".

Court argued that the contracts offered by prediction market operators have the characteristics of wagers. "Prediction market contracts have all the features of a bet," she said. She added that many event contracts "have nothing to do with investment", pointing to sporting results as the clearest example, and said this raises questions over whether they can properly be described as investment products.

ASIC also identified market integrity concerns. These include the possible misuse of confidential information, market manipulation, and disputes over how the outcomes of events are determined. Court warned that Australians who use offshore prediction markets directly online do not have protections under Australian law. She also noted that Australian financial services licensees that help clients reach offshore platforms remain bound by all of their licence obligations.

The statement touches on the central regulatory question around the sector: whether prediction markets are a form of gambling. In the United States, the largest market, the Commodity Futures Trading Commission has backed operators such as Kalshi, Polymarket, Crypto.com and Robinhood. Some states take the opposite view, and Arizona and Utah have filed criminal charges against Kalshi, which has a valuation of more than $40bn.

Elsewhere, some jurisdictions have started to treat prediction markets separately from gambling. Gibraltar moved first, with Tobique in Canada and Nevis in the Caribbean following. In Europe, regulators in countries including France, the Netherlands and Portugal have voiced opposition. Polymarket, which is reportedly pursuing a $21bn valuation, has been engaging with the UK Financial Conduct Authority and the European Securities and Markets Authority to promote wider acceptance.

Because leading platforms do not want to be overseen by gambling regulators, securities regulators such as ASIC are the bodies they would need to persuade. On the basis of Court's remarks, Australia looks set to stay closed to retail prediction markets for the foreseeable future.