The Australian government has issued a warning that “no prediction markets are currently licensed as financial markets in Australia” and that citizens considering using them are “more likely to lose money than make money.”
The message came via a release from Moneysmart, a financial guidance website operated by the Australian Securities and Investments Commission (ASIC) – the nation’s financial regulator.
ASIC warns that prediction markets present risks, including the possibility that “you may be betting against other traders with confidential or inside information.” This point has been recently highlighted in a Netflix documentary about prediction markets, which cited numerous cases of manipulation, including by former US congressman George Santos who was this week fined US$35,000 by the Commodity Futures Trading Commission (CFTC) for placing a contract on an event that he controlled.
The financial watchdog also warns that, since no prediction markets are licensed in Australia, citizens “can’t access important rights and protections under Australian financial services law.” As such, ASIC further redirects potential bettors to the Australian Communications and Media Authority (ACMA) list of blocked gambling websites.
The list of blocked sites currently includes global predictions platform Polymarket.com, which the ACMA last year banned for being in breach of Australia’s Interactive Gambling Act 2001.
Notably, the same list of blocked sites does not include Polymarket rival Kalshi. At the time of writing, Kalshi had an extensive list of Australia-related contracts listed, both live and concluded – largely concentrated on sports but also including election results, GDP, foreign exchange rates and more.
ASIC said Australians should be “very cautious and avoid engaging with offshore prediction markets providers.”
The release follows a similar warning issued by the same authority regarding Contracts For Difference (CFDs) – a “financial product used to speculate on changes to the price of an underlying asset.”
CFDs are described as a “type of derivative – its value is based on the value of the underlying asset. You don’t own the underlying asset and have no rights to it.”
The watchdog further explains that a CFD “is effectively a bet on whether the value of the underlying asset is going to rise or fall in the future. This is compared to the value when the CFD contract is opened.”
In Australia, CFDs are legal but are “only available to trade ‘over-the-counter’ – they are not traded on a licensed exchange,” according to ASIC. “That means a CFD is a contract between you and the issuer. You both agree to pay the difference in price of an underlying asset between the open and close of the contract.”
The regulater added that “a CFD contract is legally binding.”
In the case that the market goes against the bettor, the CFD issuer can “ask you to pay extra money at short notice to keep your CFD position open (a ‘margin call’)” or request to “close our your CFD, for whatever it’s worth at the time. You may lose all the money you invested.”
In addition, “CFD contracts are not all the same. Every CFD issuer has their own terms and conditions. You rely on the issuer to fulfill their obligations to you.”
The authority claims that “most CFD investors lose money,” citing ASIC data “that at least 68% of retail investors lost money trading CFDs … The more you trade, the more you lose – especially after fees. Most retail investors stop trading CFDs within their first year.”
The authority said it encourages users to fully understand the complex workings of CFDs before investing in the financial product, noting that CFD providers must have an Australian Financial Services (AFS) license.
While ASIC refers specifically to betting or bets when speaking about prediction markets, it refers to CFDs as trades.
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