New Delhi, 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."
— ANI
Reader Comments
I'm skeptical. We've seen how unregulated markets work in India - remember the crypto chaos? Before jumping into opinion trading, we need strong investor protection mechanisms. Otherwise it's just gambling with extra steps. Good analysis by Mr. Menon though.
As someone who's used prediction apps, I can confirm the potential is huge! Made ₹25k last month predicting election results and cricket matches. But yes, the tax treatment is confusing - sometimes treated as income, sometimes as gambling winnings. Clear rules would help.
Interesting perspective, but we must be careful. In a country where financial literacy is low, such platforms could easily be misused for scams. Regulation is needed, but so is financial education. Maybe SEBI can run awareness campaigns alongside any new framework.
The comparison with US markets is good, but India needs its own model. Our market psychology is different - we're more emotional traders. Any regulation should account for this cultural aspect. Also, what about small towns where people might not understand the risks?
This could be revolutionary for women investors! Many of us follow politics and economics closely but don't trade stocks because it seems complicated. Opinion trading on everyday topics could be more accessible. But please make the platforms more user-friendly than current trading apps!
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.