Hong Kong flags prediction market risks after policy U-turn
Hong Kong has warned about the growing use of online prediction markets, saying these platforms could fall foul of local gambling laws and leave users exposed to financial risks. The alert comes just days after officials paused plans to legalise basketball betting in the city.
Reportedly, the Investor and Financial Education Council (IFEC), which operates under the city’s Securities and Futures Commission, issued a formal statement asserting that platforms such as Polymarket and Kalshi fall outside the scope of regulated investment activity. And so, users engaging with these services are not protected by the Securities and Futures Ordinance, meaning there is no formal mechanism to resolve disputes or recover lost funds.
Not recognised as ‘investment products’
Officials stressed that prediction market contracts are not recognised as investment products. Unlike normal investments that are linked to real assets, these platforms work on simple yes-or-no outcomes based on real-world events. Regulators say this makes them look more like gambling than genuine investing.
Users can place bets on things like politics, markets, sports or even the weather. While the apps may look like trading platforms, the way money is won or lost is closer to betting. Officials worry that people may mistake this kind of risky speculation for proper investing.
The IFEC said many of these platforms use blockchain technology and cryptocurrencies. While this removes the risk of middlemen, it still leaves less accountability. The officials warn that transactions on the blockchain are usually irreversible, and price swings in cryptocurrencies add extra risk and uncertainty for users.
Strict policy on online gambling
Authorities warned that the absence of regulatory oversight increases exposure to fraud, abrupt platform closures and the loss of funds held on such services. In many cases, users have little or no legal recourse if problems arise.
Under Hong Kong’s Gambling Ordinance (Cap. 148), all gambling activities must be conducted through licenced operators. Unauthorised gambling, including via offshore or private online platforms, is strictly prohibited. At present, only officially sanctioned channels, such as those run by the Hong Kong Jockey Club, are permitted.
Prediction markets occupy a legal grey area but are increasingly being viewed through the lens of existing gambling laws. Regulators have made clear that the use of cryptocurrencies does not exempt users or operators from compliance. In some cases, such transactions may themselves contravene local regulations.
The warning comes amid rapid global growth in the sector. In 2025, Polymarket recorded trading volumes of more than $21.5 billion, while Kalshi surpassed $17 billion. Although no official figures are available for Hong Kong due to the activity’s unregulated nature, international data suggests users in the city have been active, particularly in markets tied to politics and digital assets.
Concerns have also been raised about the appeal of high returns and favourable odds, which may attract inexperienced participants. Experts note that, in the absence of supervision, users have limited protection if payouts are delayed, disputed or withheld entirely.
Basketball betting plans stall
In April 2026, the Hong Kong government suspended plans to introduce basketball betting, which had been scheduled for September, citing concerns over a possible rise in illegal gambling linked to the growth of prediction markets.
The IFEC has since advised the public to clearly distinguish between investing and gambling, noting that such platforms do not offer the protections available in regulated financial markets. Authorities restated that only licenced channels are permitted under existing laws, and activities on unregulated platforms may fall outside legal safeguards.
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