New Zealand has effectively banned betting on major online prediction markets like Polymarket and Kalshi, platforms that gained prominence during the 2024 US elections by allowing users to wager on political outcomes and world events.
Regulators determined the markets violate gambling laws, according to Radio New Zealand, but the move raises complex questions about whether these platforms are gambling operations or legitimate forecasting tools that aggregate information.
Prediction markets sit at the uncomfortable intersection of finance, gambling, and information aggregation. And New Zealand's ban puts it at odds with jurisdictions treating these as legitimate forecasting mechanisms.
Prediction markets allow users to buy and sell contracts based on future event outcomes. If you think a political candidate will win, you buy contracts that pay out if they do. Prices theoretically reflect the crowd's collective probability assessment – a candidate trading at 60 cents represents a 60% perceived chance of winning.
Advocates argue these markets aggregate information more effectively than polls or expert predictions. Participants have financial stakes, theoretically incentivizing careful research and honest assessment. During the 2024 US elections, Polymarket attracted billions in trading volume and was widely cited as a forecasting benchmark.
But regulators see gambling. Users are wagering money on uncertain outcomes – the definition of betting. The fact that outcomes involve politics or world events rather than sports doesn't change the fundamental mechanism.
New Zealand's Gambling Act requires licenses for any operation involving wagers on uncertain events. Polymarket and Kalshi don't hold New Zealand licenses and aren't applying for them. The ban follows enforcement of existing law rather than new regulation.
Mate, the law hasn't caught up with technology that blurs gambling and information markets. New Zealand is treating this as straightforward gambling enforcement, but it's more complicated.
The platforms argue they're information aggregation tools, not casinos. Kalshi obtained US Commodity Futures Trading Commission approval to operate as a regulated exchange, not a gambling site. Polymarket operates on blockchain technology and claims to be a decentralized protocol rather than a traditional betting operation.
These distinctions matter in some jurisdictions. US law distinguishes between gambling and commodity futures. UK regulators have allowed political betting for decades through licensed bookmakers. But New Zealand makes no such distinction – wagering is wagering.
The ban is practically difficult to enforce. Both platforms operate online with cryptocurrency payment options. Kiwis can access them through VPN services or by using international payment methods. The ban makes usage illegal but doesn't block access.
That creates a regulatory gray zone where tech-savvy users can continue trading while casual participants face legal risk. It's similar to online poker enforcement – illegal but largely unpoliced at the individual level.
The decision also affects research and forecasting. Academics and journalists used prediction markets as data sources during the 2024 elections, sometimes finding them more accurate than polls. New Zealand researchers now face restrictions on accessing these tools.
Some analysts suggest New Zealand could create a licensing framework for regulated prediction markets, similar to how it licenses other forms of betting. But that would require legislative change and political will to distinguish prediction markets from traditional gambling.
The government shows no appetite for such reform. The centre-right coalition is focused on economic issues, not regulatory innovation for niche financial technology. Prediction markets remain lumped with online casinos and offshore betting sites.
The ban reflects broader regulatory caution about crypto-enabled platforms that operate across borders without traditional oversight. New Zealand has been relatively conservative on cryptocurrency regulation, and prediction markets using blockchain technology trigger similar concerns.
International regulatory approaches vary widely. Singapore banned them. UK allows them under gambling licenses. US is divided between states and federal agencies with competing interpretations. There's no global consensus.
For now, New Zealand has chosen prohibition. Whether that's wise depends on whether you see prediction markets as useful information tools or gambling operations in forecasting clothing.
The platforms will survive – their primary markets are in the US and internationally. But Kiwis wanting to participate now face legal risk for engaging with a tool that some jurisdictions consider legitimate financial innovation.
That's the challenge with regulating borderless digital platforms – laws are national, but the internet isn't.
