Prediction market platforms offering diverse gambling options and attractive odds are surging in popularity, observers have said, warning about payout risks amid Hong Kong authorities halting plans to legalise basketball betting.
They also said on Tuesday that Hong Kong residents who took part in these platforms, which use cryptocurrency for transactions, could be breaking gambling laws while facing unregulated contract disputes with the events they bet on.
On Monday, authorities announced the suspension of plans for legalised basketball betting originally set to launch in September. They cited the rapid rise of prediction markets as a significant risk in attracting public attention to such platforms and indirectly fuelling the illicit market.
A prediction market treats future events like stocks and is based on crowdsourced trading. Instead of trading equity shares in a company, people buy and sell “shares” with cryptocurrencies such as USDT or ether, based on the outcome of a specific “yes-or-no event”, such as an election result or a sports competition.
Vera Yuen Wing-han, a political economy lecturer at the University of Hong Kong, said bettors gravitated towards more attractive odds and a diversity of events to gamble on, ranging from current affairs to the weather on a given day.
A check of the New York-based platform Polymarket, which has an estimated valuation of US$14.21 billion, revealed several trending bets, including wagers on whether the US and Iran would reach a permanent peace agreement by a specific date, with US$4 million at stake and live betting on five-minute price fluctuations of bitcoin.
