00:02these are markets that allow you to bet on a kind of binary outcome so an event will happen
00:08or it won't happen um and to give you an example of some of the events we see based in
00:13australia
00:13that are that you can bet on on overseas markets they include things like the outcome of rba rate
00:18decisions uh but they are binary in the sense that there are two possible outcomes either
00:23the event happens and you you get you win um or the event doesn't and you lose all of your
00:28money
00:29um and that's why we're really out warning people because these are sometimes promoted as being like
00:34investments because they do operate kind of like markets but in reality they're much more akin to
00:39gambling than traditional investments yeah so akin to gambling we see the market heavily on social
00:45media even at the recent world cup why are they considered different to gambling well i think that
00:52they operate in a slightly different way to traditional gambling products so if you bet
00:56through a bookmaker you're essentially betting against the house so they set the odds you go
01:00in and place a bet based on those odds in prediction markets um you're essentially um betting in a market
01:07where the probability is is set by the proportion of other people that want to bet on the opposite
01:12outcome to you so that the i guess the the odds are set in a slightly different way but uh
01:18otherwise
01:18they're pretty much the same as gambling as i said you're betting on whether something will happen
01:23or not um and one of the other risks with these markets is what you don't know is how much
01:28information the other people who are betting on the opposite outcome might have so they might have
01:34inside information if it's a sporting event they might have particular insights into a sports person or
01:39team if it's a political event they might have access to particular inside polling information
01:45as an individual australian placing a bet on one of those overseas markets you don't know about
01:50those advantages that other people have and so you're often at a disadvantage yeah so they're
01:56illegal in australia but australians can use them and they can even bet on outcomes here in australia
02:01such as the rba interest rate hikes or otherwise these concerns about what australians are not protected
02:07from can you spell out for us a little bit more about what what they are not protected from in
02:12using
02:12these markets well if you engage with the market in australia as an individual or retail investor
02:18there are a range of protections that you get so we've got a really good complaints framework in
02:23australia that says a firm's got to give have an internal complaints process so if something goes
02:28wrong you can complain to them if you're not happy you can go to an external body we've got rules
02:33over
02:33client money so if they're handling money that you put in it's got to be uh stored in a particular
02:38way
02:39so that's protected if something goes wrong and there are a range of other protections as well and none of
02:43those apply to um offshore markets because they are protections that have been crafted to apply to
02:50markets that are licensed to operate in australia and at this stage there are no businesses that have
02:57got a license to operate a predictions market in australia so if you are engaging in those markets
03:01it's going to be a market offshore without those protections so yeah the warning from ASIC how are you
03:08getting that out so it can be heard so we are we've published some new information on the ASIC
03:15money smart website this is a government website that's full of information that you can trust about
03:20how to make money decisions particularly decisions about investing your money so this steps through
03:25what prediction markets are some of the common risks in engaging in those offshore prediction markets
03:30and how to go go about engaging and investing safely but in particular we're really saying to people
03:35think about this as gambling don't think about it as an investment and don't get caught up in the
03:40hype that you might see online that's really spruiking these types of markets yeah and you know i guess it
03:45really exposed to that insider trade trading there do you think regulated versions of these markets will
03:51be allowed in australia and and should they be well if we were to receive an application from somebody
03:58operating to wanting to operate a prediction market in australia we would determine that application yes or no
04:04under the law but that's not the reality now nobody has submitted an application for ASIC and that
04:10means that if you're engaging these mark in these markets now it will be an offshore market without
04:15those protections so that's a really important warning to australians um be really cautious about
04:21engaging in these markets because they come with significant risks asset commissioner alan kirkland thank
04:26thank you for joining us this morning
04:28thank you for joining us this morning
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