SEBI Cautions Investors Against Opinion Trading Platforms in India

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SEBI has warned investors against ‘opinion trading platforms,’ a new form of online betting in India that allows users to wager on real-life events.
Although these platforms have operated without much oversight until now, authorities are beginning to scrutinize them due to their rapid growth.
The sector has attracted over ₹4,200 crore in funding from major investors like Sequoia Capital and Y Combinator, with annual transaction volumes exceeding ₹50,000 crore and a user base of over 5 crores. Revenue for the industry is expected to cross ₹1,000 crore in FY 2024-25.

Opinion trading platforms allow users to place bets or trade on the outcome of yes/no propositions related to real-world events.
The payout is determined by whether the predicted event occurs.
These platforms often mimic investment platforms by using financial terms like “profits,” “stop loss,” and “trading.”

To appear legitimate or investment-oriented, some of these platforms use language typically associated with securities trading, which may mislead users into believing they are making genuine investments rather than bets.

Prominent Indian companies in this space include:
- Probo (Gurugram-based): Offers prediction markets across diverse topics like sports, elections, and cryptocurrency.
- MPL Opinio: Focuses solely on cricket-related predictions.

Betting on Real-Life Events
- These platforms let users earn money by predicting the outcomes of real-world events such as sports matches, elections, weather changes, or cryptocurrency trends.
- Users place bets on “yes” or “no” type questions.
- For instance, users may be asked: “Will political party X win the election by a margin of N?”
- If their answer is correct, they win money; if incorrect, they lose their stake.
Varied Themes and Topics
- Popular themes include:
  - Outcomes of cricket and other sports matches
  - Individual athlete performances (e.g., runs scored or goals made)
  - Financial predictions like whether Bitcoin will reach a specific value
These platforms blend elements of gambling with the structure of trading, offering financial incentives for accurate predictions.

Outside SEBI’s Regulatory Scope
- SEBI clarified that opinion trading platforms generally fall outside its jurisdiction, as the activities conducted do not involve trading in recognized securities.
- Therefore, these platforms are not regulated or registered with SEBI.
Unrecognized and Illegal Trading
- If any opinion traded on these platforms qualifies as a security, such trading becomes illegal since these platforms are not authorized stock exchanges.
- SEBI emphasized that no investor protection mechanisms will apply in such cases.
Risk of Regulatory Action
- SEBI warned that these platforms could face legal consequences for violations.
- It also directed recognized stock exchanges to act against any such infractions.
Global Regulatory Landscape
- Countries like the US, UK, and Australia regulate opinion trading platforms.
- In the US, Kalshi operates under CFTC oversight.
- However, platforms like Polymarket have faced legal issues for not being registered with regulators, indicating the complexities involved.
India’s Regulatory Vacuum
- India’s IT Ministry has proposed amendments to regulate online gaming, potentially covering platforms like Probo.
- However, these rules lack enforceability at present, leaving a significant legal gap in the oversight of opinion trading platforms.