In the fast evolving digital space, recently a new trend called “Opinion Trading” is quietly making headway, attracting many investors and bettors alike. The market regulator recently came down heavily on them and cautioned investors that it is not part of its regulatory purview.
Opinion Trading is essentially a form of prediction market where users place bets on the outcome of events. For instance, whether Indian cricket team will win the T20 World Cup or if Bitcoin will hit a specific price.
Now coming to the outcome part, if these predictions come true, they earn payouts and on the other side, they lose their stake if it doesn’t match the outcome.
For many this may sound intriguing, but is important to understand the nuances of opinion trading and the regulatory concerns surrounding it.
What are opinion trading platforms?
These platforms allow users to bet real money on the likelihood of specific events happening or not happening. Moreover, the events can range widely from political outcomes and sports scores to financial market movements.
In India, some of the popular platforms like Probo, MPL Opinio, and PlayerzPot are gaining traction. On these platforms, a typical transaction involves placing a wager on a simple yes/no proposition, such as “Will Chennai Super Kings score more than 300 runs against Mumbai Indians in the IPL?”.
Intriguingly, if the event happens as predicted, users are rewarded with a payout. In the other case, if the outcome is different from what they wagered, they lose the amount they staked. This system has gained a lot of attention in recent months, especially with its growing user base and investment funding.
The roaring popularity and concerns
Earlier in December, 2024, The Indian Express had reported about the opinion trading sector’s explosive rise, reaching funding levels of over Rs 4,200 crore from major investors like Sequoia Capital, Y Combinator, and Accel Partners. The sector is attracting more than 5 crore users in India.
In layman terms, the craze around opinion trading is fuelled by its simple game like structure. Basically, it is a game of prediction where users are drawn to the thrill of intuition of real-world events with the potential to make money.
For example, imagine betting on whether India will win a cricket match against Pakistan. As these platforms grow, they continue to attract new participants looking for an easy way to make money on their predictions.
What is SEBI’s stand on opinion trading
In a latest development, the market capital regulator, Securities and Exchange Board of India (SEBI) has clarified that opinion trading is not part of its regulatory purview.
This is because the “trade” occurring on these platforms does not involve any actual financial securities, making it distinct from regular stock market trading. The authority further warned users that these platforms are not covered under the investor protection mechanisms that apply to legitimate financial markets.
For SEBI, the most concerning factors is the use of terms like “profits,” “stop loss,” and “trading” on these platforms, which can easily mislead users into thinking they are engaging in a form of investment similar to stock or derivative trading.
A look at broader area
Looking globally, opinion trading platforms are regulated in certain countries. In the United States, some states allow regulated forms of opinion trading, where players can wager on events like sports outcomes or political results, but these markets are closely watched. In the United Kingdom, opinion trading platforms are categorised as gambling platforms and are subject to specific regulations.