Australian Financial Watchdog Advises Caution as No Prediction Markets Hold Local Licences
Australia’s financial watchdog, the Australian Securities and Investments Commission (ASIC), has issued a warning through its Moneysmart website stating that no prediction markets are currently licensed as financial markets in the country. The regulator cautioned that individuals using these platforms are more likely to lose money than make money.
The warning highlights significant risks, including the potential for users to trade against participants with confidential or inside information. ASIC pointed to manipulation concerns featured in a recent Netflix documentary, which cited an example involving former U.S. congressman George Santos, who was fined US$35,000 by the Commodity Futures Trading Commission for placing a contract on an event he controlled.
Regulatory Protections and Offshore Platforms
Because prediction markets are unlicensed in Australia, users cannot access protections under local financial services law. ASIC directs potential users to check ACMA’s blocked gambling websites list, which banned Polymarket.com last year for breaching the Interactive Gambling Act 2001. However, platforms like Kalshi remain unlisted despite offering various Australia-related contracts. ASIC strongly advises Australians to exercise extreme caution and avoid dealing with offshore prediction market providers.
Parallels Drawn With Contracts for Difference (CFDs)
ASIC linked its prediction market guidance to previous warnings concerning Contracts for Difference (CFDs). Described as derivatives used to speculate on underlying asset price movements, CFDs are legal in Australia but traded exclusively over-the-counter rather than on licensed exchanges.
The watchdog noted that most retail investors lose money trading CFDs, with figures showing that at least 68% incur financial losses that worsen with increased trading and fee accumulation. While different terminology is used, referring to bets on prediction markets and trades on CFDs, ASIC’s underlying message remains consistent: participants must be fully aware of high loss risks, limited legal protections, and the terms enforced by offshore and local issuers.
