New Delhi [India], August 19 : Legal expert Nikhil Menon, in a special interview with ANI, stressed the urgent need for regulatory clarity on opinion trading and prediction markets in India, calling them a powerful yet under-recognised financial innovation.
"Unfortunately, under the current Indian legal framework, there is no clear definition of opinion trading or prediction markets. At present, it is loosely equated with a 'game of skill.' But in reality, these markets are much broader, especially if we look at how they function globally. In the US, for example, prediction markets fall under the oversight of the Commodity Futures Trading Commission (CFTC), which is comparable to SEBI in India," Menon explained.
He stated that the lack of regulation has created uncertainty, with many opinion-based companies facing legal disputes and taxation challenges. "Without regulatory clarity, there is a constant mismatch. This industry is far more than just a game of skill. It needs to be recognised as a distinct and innovative sector with its own regulatory framework. Ideally, SEBI should regulate it, or in the alternative MeitY should step in and provide oversight, separate from gaming or gambling laws," he said.
On the global perspective, Menon added that apart from the United States, most other countries have adopted a relatively liberal approach toward prediction markets.
Contrasting it with stock trading, Menon said prediction markets are more inclusive, "Trading in the stock market requires specialised knowledge, and studies show only a select few consistently make profits. Retail investors continue to lose despite investor protection mechanisms. Opinion trading, however, is built on subjects that common people already understand. For instance, while I may not know much about stock trading, I might know how India's GDP will grow. Opinion trading allows individuals to monetise such knowledge and build wealth."
According to Menon, a well-designed regulatory framework could democratise wealth creation and strengthen the digital economy. "Platforms like Probo already see transactions worth thousands of crores flowing through them, involving banks, payment gateways, and intermediaries. With proper regulation, this ecosystem could scale further, benefiting both participants and the economy at large."
Concluding the discussion, Menon described opinion markets as an "all-weather trading mechanism." In my view, opinion markets are both inflation and recession proof. For instance, changes in the repo rate can trigger recessionary trends or inflation in traditional markets. However, opinion markets operate differently, allowing individuals to continue trading regardless of macroeconomic shifts. This makes them more resilient compared to conventional trading platforms, he remarked.
Highlighting its inclusive benefits, he said, "I have seen reports where many people trading on opinion apps have earned more than in their regular jobs. With the right regulatory clarity, this could become a powerful wealth-building tool for ordinary citizens while strengthening India's digital economy."
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