ASIC Flags Prediction Markets as Not in the Public Interest
Australia's corporate regulator has drawn a clear line in the sand. In a statement published on 30 October 2026, the Australian Securities and Investments Commission said it is not currently convinced that prediction markets for retail clients serve the public interest, aligning its stance squarely with its earlier prohibition on binary options and signalling that an Australian market licence for these products is unlikely to follow. For accounting firms, auditors, and CFOs serving Australian financial services businesses, the statement carries immediate obligations that go beyond a regulatory opinion.
What ASIC Actually Said
The statement is grounded in ASIC's statutory duty under section 798A of the Corporations Act, which requires the regulator to weigh whether granting an Australian market licence would be in the public interest. ASIC concluded that prediction market contracts share the defining structural features of a bet: they are highly speculative, and they resolve on an all-or-nothing basis tied to the occurrence of a specific event.
The binary options parallel
ASIC was deliberate in linking prediction markets to binary options. Both product types ask a participant to speculate on a binary outcome of a future event. The key operational difference is distribution: prediction market contracts are typically offered through a market platform, whereas binary options were sold over the counter via brokers. ASIC banned binary options for retail clients in 2021, a decision informed by data showing that up to 77% of retail clients who traded them lost money, with losses reaching $14 million in a single year. The regulator's public interest analysis for prediction markets runs along the same track.
The events at issue
ASIC went out of its way to note that many of the underlying events in prediction markets have no connection to investment at all. It cited examples such as rainfall forecasts and sporting results. This matters for the regulatory framing: products where the underlying reference has no economic or investment rationale sit uncomfortably within a financial services licensing regime designed to protect investors. It also raises a classification question relevant to any firm that has been treating access to these platforms as an ancillary financial service.
Market Integrity Risks ASIC Identified
Beyond the consumer protection angle, ASIC called out a distinct set of market integrity concerns. These are worth separating from the retail harm argument because they affect institutional and wholesale participants as well.
Confidential information and manipulation
Prediction markets can aggregate private information at scale. ASIC flagged the risk that participants with access to confidential information, whether a corporate insider, a government employee, or a professional with privileged knowledge, could trade on that information in a prediction market context. The regulator also identified market manipulation as a live concern, noting that the binary settlement structure makes outcome disputes easier to engineer and harder to adjudicate.
Settlement and outcome determination
Disputes over how outcomes are determined represent a third strand of concern. Unlike exchange-traded derivatives where settlement methodology is standardised and supervised, many prediction market platforms use resolution procedures that are less transparent, sometimes delegated to decentralised governance mechanisms. ASIC's concern here points to a gap that existing Australian market infrastructure rules were not designed to fill.
Obligations on Australian Financial Services Licensees
The most operationally significant part of ASIC's statement targets Australian financial services licensees (AFSLs) that facilitate client access to offshore prediction market platforms. ASIC was explicit: all AFSL obligations under Australian law continue to apply to this activity, regardless of where the prediction market itself is incorporated or operated.
What "facilitating access" means in practice
This is a broad framing. A licensee that refers clients to an offshore prediction market platform, white-labels access to one, includes such a platform in a product dashboard, or accepts fees or commissions for directing clients there is likely caught by ASIC's statement. The regulator is not restricting its concern to firms that formally operate prediction markets; it is reaching firms that sit anywhere in the distribution chain. Legal advice should be sought before any firm continues activity in this space.
What retail clients accessing offshore platforms should know
ASIC was also direct with individual Australians who access offshore prediction markets directly online: they have no protections under Australian law. Disputes, losses, or platform failures are outside ASIC's jurisdiction and beyond the reach of Australian compensation schemes. From a client advisory perspective, this is a material disclosure point for any financial adviser or accounting firm that fields questions about these products.
International Consistency and the Broader Regulatory Direction
ASIC noted that its approach is consistent with steps taken in comparable jurisdictions, citing parts of Europe and the United Kingdom, where regulators have restricted or prohibited retail access to event contracts that share the structural characteristics of binary options. This cross-border alignment matters for two reasons.
A converging global standard
Regulatory convergence on prediction markets is accelerating. The contrast with the United States is instructive: the CFTC has taken a different path, actively litigating to preserve federal oversight of prediction markets and shield them from state-level restrictions, as seen in the CFTC lawsuit over prediction market jurisdiction in Utah. Australia is firmly in the restrictive camp alongside the UK and much of Europe. Firms operating across multiple jurisdictions need to manage these divergent frameworks carefully, because a product that is permissible under CFTC oversight in the United States may expose an Australian AFSL to regulatory action if the same access is offered to Australian retail clients.
Implications for product classification and accounting treatment
The regulatory framing ASIC has adopted has direct accounting consequences. If prediction market contracts are treated as analogous to binary options, the accounting treatment for any gains, losses, or open positions would follow the derivative or financial instrument classification under AASB 9, not the investment or revenue classification that some platforms have applied. Firms that have been using crypto accounting software or digital asset accounting software to record prediction market activity should review whether the classification logic in their systems reflects ASIC's current framing. This matters for balance sheet presentation, profit and loss attribution, and disclosure. For a broader look at how shifting market structure classifications ripple through accounting workflows, see our coverage of how market structure shifts affect digital asset accounting software workflows.
Practical Steps for Firms and CFOs
ASIC's statement is a point-in-time position, not a final rule or a ban. But that does not reduce its compliance weight. Regulators routinely use public interest statements as the precursor to enforcement action or formal prohibition, and the binary options precedent suggests ASIC is willing to follow through.
Immediate compliance actions
Accounting firms and CFOs advising Australian financial services businesses should treat the following as priority items:
- Audit any current or planned product offerings, referral arrangements, or platform integrations that involve prediction market access for retail clients.
- Review marketing materials, client communications, and disclosure documents to ensure they do not characterise prediction market contracts as investment products in a way that conflicts with ASIC's framing.
- Assess whether existing AFSL conditions cover prediction market facilitation activity, and obtain updated legal advice if there is any ambiguity.
- Check that your crypto bookkeeping software and related systems classify any prediction market positions consistently with the derivative or bet framing ASIC has applied, rather than as conventional investment holdings.
- Ensure client-facing advisers are briefed to disclose the absence of Australian protections when clients raise offshore prediction market platforms.
Monitoring the regulatory pipeline
ASIC's statement references its obligation under section 798A to assess public interest when any application for an Australian market licence is made. No such licence has been granted. Firms should monitor ASIC's consultation calendar and media release register for any follow-up action, including a formal product intervention order of the kind used for binary options in 2021. If a formal prohibition follows, firms will need to unwind any facilitation arrangements quickly, and the accounting entries for unwinding fee income, commission accruals, or hedging positions will need to be prepared in advance.
Frequently Asked Questions
Are prediction markets currently banned in Australia?
No formal ban has been issued as of ASIC's 30 October 2026 statement. ASIC has stated it is not currently convinced these products are in the public interest for retail clients, and no Australian market licence has been granted for them. A formal prohibition could follow, as it did with binary options in 2021, but has not yet been made.
Does ASIC's statement apply to wholesale or sophisticated investors?
ASIC's stated concern is specifically about retail clients. The public interest test under section 798A and the binary options parallel are both framed around retail harm. Wholesale and sophisticated investor access is not explicitly addressed in the statement, but market integrity concerns, such as misuse of confidential information and manipulation, apply regardless of client classification.
What are the AFSL obligations for a firm that currently facilitates access to an offshore prediction market?
ASIC has confirmed that all AFSL obligations continue to apply to this activity. This includes appropriate advice and disclosure obligations, product suitability assessments, and compliance with any conditions attached to the licensee's AFSL. Legal advice specific to the firm's arrangements is essential before continuing the activity.
How should prediction market positions be classified in accounting records?
ASIC's framing aligns prediction market contracts with binary options, which are treated as derivative financial instruments under Australian accounting standards. Under AASB 9, this means fair value measurement through profit or loss in most cases. Firms using crypto accounting software or digital asset accounting software should verify that their classification rules reflect this framing rather than treating positions as investments or intangible assets.
Does this affect Australian clients using offshore prediction market platforms directly, without going through an Australian licensee?
Yes, but in a different way. ASIC has made clear that Australians who access offshore prediction markets directly have no protections under Australian law. ASIC has no jurisdiction over the offshore platform. The practical implication is that losses, disputes, or platform insolvency are not covered by Australian compensation arrangements, and ASIC cannot pursue the offshore operator on a retail client's behalf.