Walk into any RSL in Australia and you are legally permitted to feed your week’s wages into a poker machine. Sometimes, you leave with nothing.

But if I try to place a $50 trade on who the next Federal Reserve Chair will be, based on my knowledge of the candidates, the authorities consider me to be playing an online casino.

Prediction markets are surging in popularity globally, netting $50 billion in bets last year, enabling users to trade contracts on the outcomes of real-world events.

You can bet on almost anything: the Oscar winners, when the Iranian regime will fall, how many times Elon Musk will tweet in a given month, even whether the US will confirm alien life (currently 12 per cent).

But here in Australia they are banned.

Last August, the Australian Communications and Media Authority formally blocked one prediction market because its real-time nature constitutes ‘online in-play betting’, and because they accept crypto as payment.

The real-time nature of prediction markets is why they are such a useful tool. For example, they predicted the outcome of the New York Mayoral race far before traditional polls.

An increasing amount of research is showing prediction markets’ utility in providing a high-frequency, continuously updated, distributionally rich benchmark that is valuable to both researchers and policymakers.

In most forms of gambling, wagers create no useful information – they are ‘closed loops’. Whether you bet on horses or spin the pokies, no one is better informed afterwards. The risk is purely synthetic, manufactured for the thrill.

Prediction markets are ‘open loops’ that produce actionable intelligence.

In a casino, the expected value (EV) is always negative due to a built-in house edge. In prediction markets, the EV starts at zero (before fees), and because a participant’s skill and information analysis can exploit market inefficiencies, the EV can be positive.

As a trader, I speculate on share prices.

Prediction markets are functionally the same in that I’m trading contracts on outcomes. Both are financial instruments where skill can shift the odds in my favour.

Furthermore, prediction markets can be a positive social good, because they offer real-time likelihood of events by aggregating dispersed knowledge into a price.

When a market shows a high probability of a trade war or a rate hike, that is a signal with social utility. It helps businesses hedge; it helps society prepare.

The fact that participants have ‘skin in the game’ gives them higher utility and accuracy than other forecasts, yet we still appeal to the authority of economists who continually make wrong calls.

If it’s not about harm reduction, what explains the ban?

Overseas, prediction markets are cannibalising traditional gambling giants whose share prices have hit multi-year lows.

Perhaps Australia’s powerful gambling lobby is worried about having its lunch cut? Furthermore, the government cannot tax offshore platforms the way it taxes domestic casinos, which generate billions in state revenue.

The hypocrisy is stark.

ASIC permits Australians to trade crypto CFDs with 2:1 leverage, an extremely risky activity, yet blocks prediction market contracts on real-world events that provide no leverage at all.

If I think Bitcoin will hit $150k by the end of this year, I can buy Bitcoin itself, but not bet on this outcome in a prediction market.

We allow gambling ads to saturate the media and casinos to sponsor sports teams despite years of scandals.

If the ban were truly about harm minimisation, we wouldn’t see 88,000 poker machines in NSW alone.

Pokies exploit human vulnerabilities with bells, lights, and dissociative feedback loops. Prediction markets, by contrast, require active cognitive engagement and research.

I am apparently mature enough to lose my house at the casino, but not mature enough to hedge against the next interest rate move.

In banning prediction markets, we have become a nation that subsidises the thrill of the loss while pathologising the utility of the insight.

We should unban these platforms and regulate them for what they are: sophisticated financial instruments.