Governments globally, including Hong Kong, are expressing wariness about prediction markets. Hong Kong recently paused the rollout of basketball betting, citing concerns that prediction markets have fundamentally changed the regulatory landscape for online gambling.

After winning legislative backing for the Hong Kong Jockey Club to offer basketball betting – an initiative aimed at drawing punters away from illegal online bookmakers and capturing additional tax revenue – the government has now paused the roll-out. Officials say the rise of prediction markets has altered the landscape and warrants closer examination. So, what is it about prediction markets that unsettles officials? Prediction markets are online platforms where the menu stretches far beyond...