Point of Focus

• Australians using offshore prediction markets lack legal and consumer protections.
• Regulators fear retail users may trade against insiders holding confidential info.
• Polymarket is blocked and Kalshi restricts Australian users.

Australia’s financial regulator has warned consumers to approach offshore prediction markets with “extreme caution,” raising concerns about insider trading, gambling-like losses and the absence of domestic legal protections.

The Australian Securities and Investments Commission (ASIC) issued new guidance as platforms such as Polymarket and Kalshi attract users with contracts covering elections, interest rates, sporting events and entertainment.

Despite their growing popularity, no prediction market is currently licensed under Australian financial services laws.

Australians bypass platform restrictions

Polymarket has been blocked by the Australian Communications and Media Authority, while Kalshi has restricted access for Australian users because of local gambling rules.

However, some Australians are reportedly using virtual private networks, cryptocurrency exchanges and other workarounds to reach offshore platforms. ASIC said it could not estimate how much Australians were wagering but noted that prediction markets were offering contracts tied to domestic events, including Reserve Bank of Australia interest-rate decisions.

ASIC Commissioner Alan Kirkland warned that Australians using overseas operators would not receive the protections available through regulated domestic markets. Users could therefore have limited options for recovering funds or resolving disputes.

“Just like gambling, one possible outcome is that you lose all your money,” Kirkland said.

ASIC raises insider trading concerns

Prediction markets allow traders to buy and sell contracts whose prices reflect the perceived probability of an event. Supporters argue that this structure aggregates information and can produce accurate forecasts.

ASIC is concerned, however, that retail participants could be trading against people with access to confidential or superior information.

As prediction markets reshape the global wagering and investment landscape, an Australian corporate regulator has moved to warn about the risks of using offshore platforms beyond domestic laws and oversight.

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“One of the real risks is that you may be betting against people who have more information than you do,” Kirkland said.

The regulator pointed to US legal cases involving possible misuse of confidential information on prediction platforms, warning that the known incidents could represent only a small portion of the activity taking place.

Some contracts may also cover outcomes that participants can personally influence, intensifying concerns about manipulation and market integrity.

Australia faces regulatory test

Prediction markets have expanded rapidly since billions of dollars were wagered during the 2024 US presidential election. Monthly industry turnover has reached $50 billion, supported by social media campaigns, influencers and major sponsorship deals.

The growth is forcing regulators to decide whether the products should be treated as financial instruments, gambling services or a combination of both.

ASIC has encouraged consumers to verify whether providers are licensed and check ACMA’s register of blocked gambling websites before depositing money.

Australia could eventually create a regulated domestic market. Futures exchange operator FEX Global has expressed interest in launching the country’s first licensed prediction platform, although ASIC said it has received no formal application.

Until then, regulators say Australians using offshore markets face the possibility of total losses without the usual domestic safeguards.