ASIC Likens Prediction Markets to Betting

Australia's securities regulator, ASIC, has explicitly compared prediction markets to betting. Chair Sarah Court said in a blog post that the regulator is not currently convinced that prediction markets serve the public interest for retail customers. Court said, "Prediction market contracts have all the features of a bet."

Court noted that the event contracts offered by prediction market operators are mostly unrelated to investment. She gave sports results as the clearest example. She added that these features raise the question of whether the products can be defined as investment products.

The core of the debate is whether prediction markets are gambling. Companies and regulators are sharply divided on the issue. In the US, the federal Commodity Futures Trading Commission (CFTC) supports operators such as Kalshi, Polymarket, Crypto.com and Robinhood. By contrast, the states of Arizona and Utah have filed criminal charges against Kalshi. Kalshi, often described as the world's largest prediction market platform, has a valuation exceeding $40 billion (£29.8 billion).

Some jurisdictions have started to separate prediction markets from gambling. Gibraltar has taken the first step in this direction, and Tobique in Canada and Nevis in the Caribbean have adopted the same stance. In Europe, gambling regulators in countries such as France, the Netherlands and Portugal oppose the product. Even so, Polymarket is reportedly aiming for a valuation of $21 billion and is seeking acceptance in Europe by engaging with the FCA in the UK and ESMA in the EU.