Australia’s primary corporate watchdog has cast severe doubt on the notion that prediction markets tailored for retail clients serve any genuine public interest, forcefully arguing that the underlying contracts share all the defining features of a standard wager. While the official statement stops short of implementing an outright, formal ban, it signals a deeply hostile regulatory environment for event-based trading platforms seeking to break into the Australian market.
The regulatory posture was formalized on Friday in a public statement issued by the Australian Securities and Investments Commission (ASIC), attributed to Chair Sarah Court. The announcement arrived just one day after Court testified before federal senators, revealing that not a single prediction market operator has officially applied to establish and run such a platform within the country.
ASIC Puts Prediction Markets in the Binary Options Bucket
In its official communication, ASIC stated that it is not currently convinced that prediction markets accessible to everyday retail clients are in the public interest. The regulator described prediction market contracts as fundamentally bearing all the hallmarks of a bet, characterized by highly speculative outcomes that typically involve an all-or-nothing proposition contingent upon whether a specific event occurs or fails to materialize.
According to the watchdog, this core trait is shared directly with binary options, a controversial financial product that has already been strictly prohibited for retail clients across Australia. ASIC initially intervened by banning the sale of binary options to retail investors in 2021, a protective measure that was subsequently extended through October 2031 after empirical market data demonstrated that up to 77% of retail participants suffered financial losses.
Furthermore, the regulator emphasized that many of the underlying events driving prediction markets have absolutely nothing to do with traditional investment or economic fundamentals. ASIC pointed to trivial or highly localized scenarios—such as forecasting whether it will rain on a specific day, determining whether a particular sports team will win a match, or even betting on the exact margin of victory in a game. These specific features, the agency argued, raise profound questions about whether prediction market contracts can legitimately or appropriately be described as financial investment products.
Beyond consumer protection concerns, the regulator flagged substantial market integrity risks. These risks encompass the potential misuse of confidential, non-public information, deliberate market manipulation by sophisticated actors, and intractable disputes over how specific outcomes are ultimately determined and verified. Under section 798A of the Corporations Act 2001, ASIC is legally mandated to carefully consider whether the granting of an Australian market license would genuinely be in the public interest, a threshold that event-contract platforms would seemingly struggle to clear.
The Landscape of Applications and Enforcement
Despite the surging global popularity of prediction markets, local operators have remained noticeably absent from the formal regulatory pipeline. Court informed a Senate estimates hearing that no prediction market operator had applied to conduct business operations in Australia, adding that any prospective application would inevitably face an exceptionally high regulatory bar.
This warning aligns with guidance already published on ASIC’s Moneysmart consumer education website, which explicitly states that no prediction market is currently licensed as a legitimate financial market within Australia. The platform cautions everyday users that they are statistically far more likely to lose money than to make a profit when engaging with such services.
For Australians attempting to bypass local restrictions by utilizing offshore prediction markets, ASIC issued a stern warning noting that these platforms offer zero legal protections under Australian law. Simultaneously, the regulator reminded local financial services licensees that facilitate access to these foreign platforms that all existing regulatory obligations, duties, and compliance responsibilities continue to apply in full force.
Certain prominent platforms are already entirely off-limits within the country. The Australian Communications and Media Authority officially blocked Polymarket in August 2025, categorizing the platform as an illegal online gambling site operating in direct violation of the Interactive Gambling Act 2001.
Global Regulatory Divergence
The cautious and restrictive stance adopted by Australian regulators mirrors growing skepticism in other major international jurisdictions, even as the broader sector experiences unprecedented financial growth. ASIC explicitly referenced several comparable international regulatory environments to justify its current approach, highlighting parts of Europe and the United Kingdom where financial authorities have similarly moved to restrict public access to event contracts that closely resemble binary options.
In July, the European Securities and Markets Authority clarified that a vast majority of existing event contracts already fall squarely under the bloc’s pre-existing retail bans on binary options across the European Union, particularly with the European Union’s Markets in Crypto-Assets framework awaiting the arrival of tokenized iterations.
Conversely, regulatory approaches globally are showing signs of significant divergence. In a striking contrast to the European and Australian postures, Gibraltar moved in the opposite direction the very same month, establishing a dedicated and specialized regulatory regime explicitly tailored to accommodate prediction markets.
This regulatory fragmentation is unfolding against a backdrop of massive corporate expansion for the sector’s leading players. Highlighting the immense commercial appetite for event-driven contracts, prediction market platform Kalshi announced that it had successfully secured $1 billion in fresh capital, pushing its corporate valuation to an impressive $40 billion.
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