ASIC warns prediction market users lack Australian legal protections
Regulation1 min read
In brief
- ASIC warned that users of offshore prediction markets lack protections under Australian law.
- Chair Sarah Court said the contracts share characteristics with binary options, banned for retail clients in 2021.
- Licensees facilitating access to offshore prediction markets remain subject to all their Australian licence obligations.
ASIC, the Australian financial regulator, has cautioned local users of prediction markets that Australian law gives them no protection. Chair Sarah Court said such contracts carry every feature of a bet and resemble binary options. Retail clients have been prohibited from buying binary options since 2021.
Court said the regulator has not yet been persuaded that offering prediction markets to retail clients serves the "public interest". In her description, the contracts are "highly speculative" and usually hinge on whether one specific event happens, with all-or-nothing results. Many of the events, she said, are unrelated to investment. Her examples were tomorrow's rainfall and the outcome of a sporting match, including the goal margin. She also pointed to market integrity risks such as misuse of confidential information, market manipulation and disputes about how outcomes are settled.
Court cautioned that Australians who go directly online to offshore prediction markets are not covered by protections under Australian law. Licensees that help customers reach those offshore platforms remain bound by their licensing duties under Australian law while doing so.