Australia’s corporate regulator has placed prediction markets in the same regulatory frame as binary options, with ASIC chair Sarah Court telling a parliamentary hearing that any future application from platforms like Polymarket would attract strict scrutiny. The comparison is not rhetorical: ASIC describes binary options as over-the-counter derivatives that let clients bet on whether a specified event happens inside a set window, and Court noted the all-or-nothing payoffs that define both products. Australia’s product intervention order banning binary options for retail clients took effect on May 3, 2021 and was extended to October 1, 2031. ASIC data shows that in the 13 months before the ban, between 74% and 77% of active retail clients lost money, with $15.7 million in losses against only $1.7 million in gains across loss-making and profitable accounts.
ASIC has received no applications from prediction market operators, and no prediction market holds an Australian Financial Services licence. Court said Australians can still access Polymarket and similar platforms, but without local protections they may struggle to recover funds or resolve disputes. The Australian Communications and Media Authority has already ordered internet providers to cut off Polymarket as an unlicensed gambling service, although users can still reach it through a VPN. Polymarket and Kalshi have accepted wagers on Australian matters including the Farrer by-election and which words Prime Minister Anthony Albanese would say in parliament. ASIC Commissioner Alan Kirkland said the licensing gap leaves users without recourse “if something goes wrong.” In Europe, the EU securities regulator has similarly argued that such bets are really binary options, banned for ordinary investors.
Meanwhile, Polymarket is examining a fresh test of on-chain forensics after hundreds of newly funded wallets placed bets before polling stations closed in Israel’s October 27 election. The wagers focused on Benjamin Netanyahu remaining prime minister and Likud becoming the largest Knesset party, and some accounts withdrew more than $100,000 after exit polls became public. Bubblemaps identified 101 accounts funded on election day before voting closed, while Polysights also flagged the pattern. On-chain data on Polygon is transparent but does not reveal wallet owners, and no public evidence currently links the wallets to election officials or insiders. Research from the University of British Columbia and lawyers at Katten highlight the broader difficulty of distinguishing research, luck and genuine inside knowledge.
Polymarket’s investigations team, led by former FBI official Shana Bautista, operates a surveillance system combining blockchain activity with social-media signals, election filings and data from banks and crypto firms, generating hundreds of daily alerts. At least two cases have been referred to the CFTC. The stakes are growing: the Council on Foreign Relations estimates Americans have wagered more than $1.4 billion on the U.S. midterms, potentially exceeding $2 billion by November 3, while Artemis put Polymarket’s one-year trading volume at $84.9 billion. A Brennan Center-supported study found favorable betting odds increased voters’ perceptions of a candidate’s chances by 10–20 percentage points, and more than 80% of respondents wanted stricter regulation or an outright ban. The Anti-Corruption Data Collective separately identified more than $20 million in 2026 midterm bets that insiders could have known beforehand, with high-stakes longshot bets winning 24.2% of the time compared with 14.9% in voter-decided markets.
Regulators are already responding: the CFTC issued a surveillance advisory in February, and Polymarket tightened its trading rules in March. The Israel investigation now presents a practical test of whether suspicious blockchain activity can be turned into credible evidence of wrongdoing.
