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Australian regulators have delivered a definitive ruling that prediction markets constitute gambling activity, not financial instruments, following an extensive investigation into US-based platform Polymarket.
The Australian Communications and Media Authority (ACMA) concluded its investigation by classifying prediction market platforms as unlicensed gambling operations subject to the Interactive Gambling Act. The decision, revealed through freedom of information requests, directly challenges the industry’s positioning as providers of financial derivatives.
Rejecting the Financial Product Classification
Polymarket has consistently maintained that its platform operates as a financial derivatives market where users trade positions on future events including elections, sporting matches and global developments. This framework has enabled similar platforms like Kalshi to operate under financial regulation rather than gambling licensing in the United States.
ACMA’s assessment found no basis for this classification under Australian corporate law. Regulators determined that users were placing monetary stakes on binary outcomes with profit expectations, without the risk management structures or investment mechanisms that would qualify as financial products. The platform’s failure to apply for an Australian gambling licence constituted a breach of national gambling legislation.
Widespread Australian Access Despite Geographic Restrictions
The investigation documented significant Australian user activity on the platform. ACMA staff successfully registered accounts, deposited funds and placed wagers while identifying as Australian residents, with no IP blocking or geographic verification systems preventing access.
Traffic analysis showed approximately 1.9 million visits from Australian locations during a six-month period starting November 2024, establishing the regulatory connection required for enforcement action under Australian law.
Investigators also identified in-play betting on live sporting events, a product category prohibited even for licensed Australian bookmakers. For an unlicensed offshore operator, this represented an aggravated regulatory violation.
Enforcement Action Following Non-Response
ACMA presented preliminary findings to Adventure One QSS Inc., Polymarket’s operating entity, in May and requested a formal response. The company did not provide submissions. The investigation was finalized by June, and Polymarket was added to Australia’s blocked gambling websites list in August, joining nearly 1,300 restricted domains.
The platform implemented Australian user restrictions only after the blocking order took effect, which regulators interpreted as implicit recognition of the ruling’s validity.
Diverging International Regulatory Approaches
Australia’s position contrasts sharply with United States regulatory developments, where prediction markets have gained mainstream acceptance. Polymarket has secured high-profile endorsements and political connections, with major news organizations including CNN referencing prediction market data in political coverage.
The permissive US regulatory environment has enabled prediction markets to capture market share from the country’s sports betting sector, which generated approximately US$14 billion in revenue during 2024. Monthly trading volumes on prediction platforms now reach billions of dollars.
However, consumer protection advocates have raised concerns that prediction markets may expose users to accelerated losses compared with traditional betting products, a claim disputed by platform operators.
Marketing Activities and Enforcement Limitations
Previous media investigations revealed Polymarket approached Australian social media influencers to promote election betting markets, despite the platform’s illegal status under Australian law. Proposed content covered federal election results, party vote percentages and individual electoral district outcomes.
While Australian internet service providers must now block Polymarket access, enforcement faces technical constraints. Users can circumvent geographic restrictions using virtual private networks and similar technologies, highlighting the challenges of regulating borderless digital platforms through national legislation.
Setting International Precedent
The formal classification of prediction markets as gambling operations establishes Australian regulatory precedent that may influence international approaches. The decision directly challenges the legal foundation supporting the sector’s global expansion and signals increased regulatory scrutiny of platforms claiming financial market status.
Polymarket’s Australian operations have ceased following the blocking order. The fundamental question raised by the investigation regarding appropriate regulatory classification of prediction markets will continue to face examination across multiple jurisdictions worldwide.
Source: Australian Communications and Media Authority
