Surging prediction markets, which use cryptocurrency, are drawing attention as the Hong Kong government canceled plans for legalized basketball betting. Experts caution that participation may violate local gambling laws and could lead to unregulated disputes.

Prediction markets are surging in popularity as cryptocurrency-based gambling platforms offering diverse gameplay and attractive odds, observers have said, warning against the risks of reneged payouts after the Hong Kong government halted plans for legalised basketball betting. They also warned on Tuesday that Hong Kong residents who participate in these platforms, which use cryptocurrency for transactions, could be breaking gambling laws while falling into unregulated contract disputes with the...