Platforms · Software · Providers · Markets
ASIC questions the product's status
ASIC has said it is "not currently convinced" that retail prediction market contracts serve the public interest, setting out its present view rather than announcing a ban. The Australian Securities and Investments Commission said contracts typically resolve as an all-or-nothing result tied to an event, a structure it compared with binary options. Those products are prohibited for retail clients in Australia.
Examples of event contracts include whether rain will fall tomorrow or a sports team's winning margin. ASIC questioned whether contracts based on events unrelated to investment should count as investment products. Section 798A of the Corporations Act 2001 requires the regulator to consider the public interest when deciding whether to grant an Australian market licence.
Offshore access leaves obligations intact
ASIC also raised concerns about misuse of confidential information, market manipulation and disagreements over how an event's result is decided. Australians who use offshore prediction market services online lack protections under Australian law, the regulator said. Australian financial service licensees that enable access to those services remain bound by their Australian-law licence obligations for that activity.
Binary options set a precedent
The products differ in how they reach customers: prediction contracts are generally available on a market platform, while brokers sell binary options over the counter. ASIC barred binary options sales to retail clients in May 2021 and later extended the ban to 1 October 2031.
The regulator's stance also resembles restrictions in parts of Europe and the UK on event contracts with binary-options-like features. Separate limits on use for retail clients run until 23 May 2027.
Finance Magnates reported that 74% to 77% of active retail clients lost money trading binary options in the 13 months before the ban, with aggregate net losses of A$14 million. It also reported in April that Robinhood was selecting which contracts to list, avoiding markets where insider information or manipulation were harder to control. US authorities charged a soldier that month in a case described as the first prediction-market-linked insider trading case.
| Measure | Figure or period |
|---|---|
| Active retail binary-options clients who lost money | 74% to 77% |
| Aggregate net losses | A$14 million |
| Period before the ban covered by the figures | 13 months |
| Retail binary options ban | May 2021; extended to 1 October 2031 |
| Retail use limits run until | 23 May 2027 |
What an operations team should check
Broker and platform teams should establish whether any client journey, API connection or partner arrangement gives Australian customers access to offshore event contracts. Ask compliance to assess whether that activity engages the firm's Australian financial service licence obligations, and who is accountable for oversight and records.
Risk and surveillance teams should ask how they would detect confidential-information misuse or manipulation involving these contracts, and how disputes about event outcomes would be handled. Who verifies the outcome used to settle a contract, and what evidence would be retained if it is contested? ASIC identified these risks but did not specify technical controls.
