Australia's corporate regulator has issued its strongest warning yet about the rise of offshore prediction markets, cautioning Australians that platforms such as Polymarket and Kalshi are operating illegally in Australia and could leave users with little or no consumer protection if things go wrong.
The warning comes as prediction markets have exploded in popularity globally, allowing users to effectively wager on the outcome of almost any future event – from elections and sporting results to interest rate decisions, wars and even celebrity news.
ASIC: Australians Could Lose Everything
ASIC Commissioner Alan Kirkland warned that Australians using offshore prediction markets face significant risks, particularly because none of the major operators are licensed to provide their services in Australia.
According to ASIC, Australians using these platforms risk:
- Losing all of their money with limited avenues for recovery.
- Trading against participants with access to better or even insider information.
- Having no Australian consumer protections if a platform fails or refuses to pay out.
The regulator also reminded Australians that many of these services are geo-blocked locally, with some users attempting to bypass restrictions using VPNs.
What Are Prediction Markets?
Unlike traditional sportsbooks, prediction markets operate more like financial exchanges.
Rather than betting against a bookmaker, users buy and sell contracts based on whether an event will happen. A contract might ask:
- Will the RBA cut interest rates this month?
- Will Australia win the Cricket World Cup?
- Will Bitcoin finish above US$150,000 by year-end?
Prices fluctuate as market sentiment changes, theoretically reflecting the crowd's assessment of the probability of an event occurring.
Platforms including Polymarket and Kalshi have attracted billions of dollars in trading volume over the past two years, fuelled by interest in politics, sport and macroeconomic events.
Illegal in Australia
The Australian regulatory position remains clear.
Prediction markets offered by overseas operators are not licensed in Australia and have previously been classified by Australian regulators as prohibited interactive gambling services. The Australian Communications and Media Authority (ACMA) has already taken action against unlicensed providers, including blocking access to Polymarket.
While no prediction market currently holds an Australian licence, reports suggest there is industry interest in eventually launching a regulated domestic alternative, although no formal application has yet been approved.
Regulatory Pressure Growing Worldwide
Australia is far from alone in scrutinising the sector.
In the United States, prediction markets are facing an increasingly complex legal landscape despite their rapid growth.
Just last week, New York filed legal action against Kalshi, alleging the platform is operating as an unlicensed gambling business under state law. Similar legal disputes have emerged in several other US states as regulators debate whether prediction markets should be treated as financial products or gambling services.
At the same time, concerns have emerged over the potential use of insider information, prompting major companies such as Microsoft to specifically prohibit employees from using confidential information when trading on prediction markets.
What It Means for Australian Bettors
For Australian punters, ASIC's message is straightforward: while prediction markets may appear similar to sports betting or investing, they currently sit outside Australia's regulated gambling framework.
That means users who access offshore platforms may have little legal recourse if disputes arise, funds disappear or markets are manipulated.
As interest in prediction markets continues to grow globally, Australia now faces an increasingly important policy question: should these platforms remain prohibited, or is there eventually room for a regulated Australian prediction market?
For now, ASIC's position is clear — Australians should approach these platforms with extreme caution.
