🔒 🔒 ASIC says prediction markets have ‘all the features of a bet’

The Australian Securities and Investments Commission (ASIC) has cast doubt on any prospect of a licensed retail prediction market in Australia.

With the explosion of the format, which is licensed as a financial product in the United States, there is mounting expectation that it will find a foothold in the Australian market at some point.

But ASIC determined it won’t be under its watch, with a statement authored by chair Sarah Court, saying the regulator is “not currently convinced that prediction markets for retail clients are in the public interest”.

“Prediction market contracts have all the features of a bet. They are highly speculative, typically involving an all-or-nothing outcome based on the occurrence of a particular event, a characteristic they share with binary options, which are prohibited for retail clients in Australia,” Court said.

“In many cases, these events have nothing to do with investment. They might include, for example, whether it will rain tomorrow or whether a particular sporting team will win or by how many goals. These features raise questions about whether prediction market contracts are appropriately described as investment products.”

The public interest test is the relevant hurdle because section 798A of the Corporations Act 2001 obliges ASIC to take the public interest into account when deciding whether to grant an Australian market licence.

ASIC’s Moneysmart guidance says that no prediction market operator holds a licence to operate a financial market in Australia.

At a parliamentary hearing on October 29, Court said no prediction market operator had submitted an application to ASIC.

She said such a submission would let the regulator assess whether the products were suitable, and she described a high threshold for approval. When The Straight examined the debate in August, financial futures exchange operator FEX Global had shown interest in a domestically regulated market, and ASIC said at the time that no formal application had been lodged.

Court said prediction markets “may also give rise to market integrity risks, including the misuse of confidential information, market manipulation and disputes over how outcomes are determined”.

Australians who access offshore prediction markets directly online “do not have protections under Australian law”, Court said.

She said that 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 this activity.

The federal government’s Moneysmart guidance says users of unlicensed offshore providers lack access to internal dispute resolution or safeguards for client money, making it harder to recover losses.

It also warns that users may be trading against people with inside information and advises consumers to check the Australian Communications and Media Authority (ACMA) list of blocked gambling websites.

ASIC said its stance mirrors its approach to binary options, which are sold over-the-counter through brokers rather than generally offered on a market platform.

The restriction took effect on May 3, 2021, barring the issue and distribution of binary options to retail customers, and was later extended to October 1, 2031.

ASIC based the extension on figures provided by five licensed issuers for the 13 months leading up to the ban.

During that period, 74 to 77 per cent of active retail clients ended up losing money, with net losses totalling $14 million. Accounts that lost money were down $15.7 million in all, while profitable accounts gained $1.7 million.

The regulator said its position is also consistent with approaches taken in parts of Europe and the UK, where access to event contracts resembling binary options has been restricted.

Court’s statement follows ASIC’s 2026–27 markets sector priorities, sent to boards and executives on September 30.

That letter listed prediction markets as a new area of focus and committed ASIC to “monitor how prediction markets and other event-based contracts are marketed and distributed, consider the boundary between wagering and financial products, and take appropriate action within ASIC’s remit”.

But prediction-market-like wagering products have already launched in Australia.

Bet Right has already put a product on the wagering side of that boundary, via InfoMarket, which is a wagering sub-brand of Bet Right run by IRPSX Pty Ltd.

Its exchange-like interface shows prices in cents for approved sporting contingencies. Prices run from 1c to 99c, representing the stake required for a total return of $1 if the selection is successful, and decimal odds are also shown.

Listed categories include the NFL, NBA, EPL, NHL, AFL and NRL, as well as politics where the relevant regulator approves.

The rules state that Bet Right is the counterparty to every transaction, that “Buy” means placing a wager and “Sell” means cashing out, and that responsible gambling measures such as deposit limits, BetStop self-exclusion and the National Consumer Protection Framework apply.

“For the avoidance of doubt, all Trades placed through the InfoMarket interface are wagers for all purposes of the Rule Book and the Racing and Wagering Act 2024 (NT),” the rules state. “The use of exchange-style display terminology does not alter the nature of the wagering contract formed between the client and Bet Right.”