Prediction markets under the radar – Hong Kong signals heightened risk

A spokesperson from the Home and Youth Affairs Bureau reportedly stated that any betting on sports in prediction market platforms was illegal. With prediction markets skyrocketing in popularity in recent years, businesses (especially those in the gaming and sports industries and those integrating prediction markets into their operations) should be aware of the potential regulatory risks in Hong Kong. One of the key legal issues raised by prediction markets is whether they are prohibited under gambling laws.

What are prediction markets?

Prediction market platforms allow users to trade on the outcome of future real-world events, ranging from weather and sports to economic trends and politics. The proposition often involves betting on a binary “yes” or “no” outcome (e.g. “Next Friday will be the hottest day in Hong Kong this year – Yes / No”). As more people join a particular predictions market, the odds fluctuate in real time, and the payouts vary. Leveraging the collective insights of crowds, these platforms allow forecasting, investment and hedging.

Prediction market transaction volumes reportedly reached US$64 billion in 2025, representing a threefold increase from the previous year. Global monthly trading reportedly rose from less than US$100 million in early 2024 to more than US$13 billion by late 2025.

With the rapid rise in lucrative prediction markets, they are increasingly coming under the radar of regulatory authorities, including in APAC, with jurisdictions like Singapore, Thailand, Australia and New Zealand classifying prediction market platforms as illegal under gambling laws. In the US, where prediction markets are regulated as financial derivatives, prediction markets have garnered regulator attention over insider trading concerns (see the recent Hogan Lovells article here).

Hong Kong's gambling law regime

In Hong Kong, all gambling activities are unlawful except those expressly authorised. The primary legalisation governing gambling activities is the Gambling Ordinance. The Gambling Ordinance criminalises all “gambling” and “lottery” activities, except those:

(a) expressly authorised by the Government which include authorised horse racing, football betting and the Mark Six lottery;

(b) licenced by the Government (e.g. licensed mahjong parlours, licensed trade promotion competitions); and

(c) exempted under the Gambling Ordinance (mainly social gambling).

Under the Gambling Ordinance, “gambling” includes:

(a) gaming (i.e. games involving an element of chance for money or other property);

(b) betting (this is not defined under the Gambling Ordinance); and

(c) bookmaking (i.e. the soliciting, receiving, negotiating or settling of a bet by way of trade or business whether personally or by any other means, including via the Internet).

A “lottery” includes (among other things):

(a) a raffle;

(b) a sweepstake;

(c) any competition for money or other property success in which: (i) involves guessing or estimating the results of future events, or of past events the results of which are not generally known; or (ii) does not depend to a substantial degree upon the exercise of skill by the competitors; and

(d) any game, method, device or scheme for distributing or allotting prizes by lot or chance, whether promoted, conducted or managed in or outside Hong Kong.

There has so far been no court case or official guidance on whether prediction markets are illegal in Hong Kong. However, the Government's recent remarks signal a heightened risk under the Gambling Ordinance. The issues are likely to be complex, given the often offshore, digital/online and decentralised nature of prediction markets.

The road ahead

It is reported that the Government will further study the emerging prediction markets model and platform before introducing new betting products.

Businesses integrating or planning to integrate prediction markets into their operations should assess the potential regulatory risks with prediction markets and monitor regulatory developments closely.

Authored by Eugene Low and PJ Kaur.