The ban first took effect on May 3, 2021 and stops firms issuing or distributing the products to retail clients. ASIC describes binary options as over-the-counter derivatives that let clients bet on whether a specified event happens inside a set window.
Court said the all-or-nothing payoffs define both prediction markets and binary options, and further noted that prediction markets often turn on events with nothing to do with investing or financial markets.
In the 13 months before the ban on binary options, between 74% and 77% of active retail clients ended up out of pocket, with loss-making accounts down a combined $15.7 million against just $1.7 million in gains for profitable ones. Earlier reviews in 2017 and 2019 found roughly 80% of retail clients lost money.
“Binary options are harmful, high-risk financial products resulting in millions of dollars in losses for retail investors before our ban,” ASIC Deputy Chair Karen Chester said when the extension was approved by Assistant Treasurer Stephen Jones.
Can Australians still use Polymarket?
Despite the hostile framing, Court said Australians can still use Polymarket and other similar platforms, but warned they get none of the protections local regulation provides and may struggle to recover funds or resolve disputes if something goes wrong.
The Australian Communications and Media Authority ordered internet providers to cut off Polymarket after judging it an unlicensed gambling service, but users can still access it with a VPN.
No prediction market holds an Australian Financial Services license, and ASIC Commissioner Alan Kirkland has said that the gap leaves users without recourse “if something goes wrong.”
Notably, both Polymarket and Kalshi let users wager on who would win a by-election in Farrer, an Australian parliamentary district. They also took bets on which words Australian Prime Minister Anthony Albanese would say in parliament.
Groups that fight gambling harm and the lobby group for Australia’s licensed betting companies have objected. In Europe, the EU’s securities regulator says these bets are really “binary options”, which are already banned for ordinary investors in the EU.