Markets of Belief: The Legal Puzzle of Opinion Trading in India

[Shivam Agrawal is a fourth-year law student at student at Hidayatullah National Law University, Raipur]

INTRODUCTION

On  29^th April 2025, the Securities and Exchange Board of India (SEBI) issued a press release, cautioning the public against engaging with "opinion trading platforms".  These platforms, like Probo and MPL Opinio, allow users to wager on real-world events, including elections and sports. SEBI highlighted that despite using investment terminology, these platforms fall outside its regulatory purview. It asserted that if such platforms allow trading in "opinions" that qualify as securities, they would act illegally as unrecognized stock exchanges. This advisory exposes a significant loophole in that these platforms operate in a grey area without any oversight mechanism.

The caution has sounded alarm bells and sparked widespread debate over the legal status and regulation of opinion trading platforms. This uncertainty undermines investor confidence and exposes regulatory gaps. This article analyzes the position of such platforms, the regulatory gaps in India  and how jurisdictions like the United States and the United Kingdom address similar platforms, not as direct models, but as informative examples. It first explains the concept and significance of opinion trading platforms. It then examines SEBI's advisory and the resulting regulatory vacuum. This is followed by a comparative analysis of countries like the US and the UK which regulate similar platforms. Finally, the article concludes with suggestions for regulatory reforms to address the challenges posed by these platforms. 

THE RISE OF OPINION TRADING PLATFORMS IN INDIA

Opinion trading platforms have recently gained traction in India's rapidly evolving digital ecosystem. These platforms allow users to place speculative bets on the outcomes of uncertain real-world events. If the user's opinion is correct, they earn a predetermined payout; if not, they lose their stake. Opinion trading resembles financial trading in form but lacks a similar legal substance.

The lure of monetizing "opinions" and low entry barriers, has fueld opinion trading's rapid growth in India. The case of MPL Opinio, a popular opinion trading platform, with celebrity endorsements and intuitive design, illustrates this trend. Backed by significant investor interest,  these platforms have quickly amassed a user base of 50 million with an annual trading volume of approximately INR 500 billion. 

However, popular consumer forums, including the New Indian Consumer Initiative (NICI), call for a blanket ban on opinion trading platforms, alleging a violation of consumers' interests. Although lacking a precise legal basis, they highlight that these platforms, by associating with celebrities and using terminology that resembles structured investments, mislead users by marketing themselves as skill-based games or as investment opportunities. They argue that these platforms effectively engage in gambling, possibly violating Section 112 of the Bharatiya Nyaya Sanhita, 2023,  and SEBI (Investment Advisers) Regulations, 2013, when they provide unregistered advisory services. Several advertisement regulations are also allegedly violated. Thus, it is essential to examine regulatory loopholes, especially since SEBI does not regulate such platforms, leaving users without remedy.

SEBI'S ADVISORY AND THE REGULATORY VACUUM

In its press release, SEBI clarified that these platforms fall outside its jurisdiction under the Securities Contracts (Regulations) Act, 1956, since they lack an underlying asset and are based solely on future outcomes. Hence, they fail to meet the legal definition of "securities". Given this fundamental difference, opinion trading platforms do not qualify as stock exchanges or intermediaries. Consequently, SEBI lacks jurisdiction to regulate these platforms or  offer usual investor protections available in securities trading. 

There is also ambiguity on whether these activities depend on "skill" or "chance", adding to market confusion. This assumes significance as skill-based games are allowed under the Public Gambling Act, 1867 while games purely dependent on "chance" constitute "gambling" which is prohibitfed. Recently, a study by Evam Law and Policy, after analyzing three prominent Indian opinion trading platforms, found that opinion trading is a game of skill. Another study by the Indian Institute of Technology in collaboration with Probo, a popular opinion trading application, also found the same. 

Further, under the Constitution's Seventh Schedule, betting and gambling fall under the legislative domain of individual states, creating a fragmented patchwork of laws. Recently, the Haryana Prevention of Public Gambling Act, 2025, was notified by the Government of Haryana. It broadly defines a bet as any arrangement, in any form between two or more parties involving the prediction of an event's outcome and whose result is uncertain to any or all of the parties at the time of agreement. If the prediction turns out to be incorrect, the predicting party must pay a determined amount of consideration to the other party. It criminalizes both participation and operation of such betting activity with stringent penalties but fails to explicitly exempt skill-based prediction markets, despite vaguely acknowledging in Section 2(1)(g) that games with a preponderance of skill can notified as exempt. It effectively amounts to a ban, while trying to protect consumers, may discourage users of genuine event-based prediction models in domains of public policy and market forecasting. 

After the Supreme Court's decision in State of Andhra Pradesh v. K Satyanarayana and Dr. K.R. Lakshmanan v. State of Tamil Nadu have applied the "dominant factor" test to identify whether a game is based on "skill" or "chance". The Punjab & Haryana High Court, in its judgment of Varun Gumber v. U.T. Chandigarh, found fantasy sports to be games of "skill" as participants evaluate, with their skill and judgment, the potential performance of each player. A similar argument may be adopted for opinion trading, in support of its regulation as skill-based activities, especially since emerging studies suggest that it is indeed skill-based. Ultimately, the controversy illustrates the challenge of regulating speculative platforms. The legal grey area exposes users to risk but also highlights the gaps in India's existing legal framework in dealing with such platforms. Given this uncertainty, it is useful to examine how other jurisdictions regulate such platforms. 

A CROSS-JURISDICTIONAL PERSPECTIVE

While opinion trading is now a global phenomenon, its legal recognition and regulatory oversight vary considerably by jurisdiction. A closer examination of the positions of the US and the UK highlights these divergent approaches. 

In the US, opinion trading is regulated in a rather fragmented manner, involving both the Commodity Futures Trading Commission (CFTC) and gambling or securities law. If the contract represents derivatives, it falls within CFTC's jurisdiction. However, if the same are perceived as wagers, state-level gambling laws may apply. According to the US Securities and Exchange Commissioner's definition of 'binary option', opinion trading may be covered within its ambit. These are a type of options contract where the return is contingent on the outcome of a "yes-or-no" question, often related to how an asset's price will move from a certain threshold. 

However, not all binary options are equivalent to opinion trading, since they usually involve financial assets and are regulated accordingly. This complex legal overlap creates uncertainty. Recent cases like Kalshi, a popular platform whose election contracts were rejected by the CFTC as unlawful gambling, illustrate the legal tussle between innovation and regulation.

In the UK, the regulation of opinion trading depends on whether it is classified as gambling or financial trading. Platforms offering contracts based on real-world events are typically regulated by the UK Gambling Commission under the Gambling Act 2005. On the other hand, spread betting, which speculates on the price movements of an asset without actually owning the same, is regulated by the Financial Conduct Authority (FCA), with several compliance requirements, including consumer welfare measures and advertisement restrictions. In 2019, the FCA imposed a complete ban on 'binary options', reasoning that they are primarily gambling products disguised as financial instruments. The ban aims to prevent fraud and unfair losses to traders. This has pushed such platforms towards compliance with gambling laws rather than financial regulation. Therefore, while the UK's approach offers clarity on the division between gambling and financial regulation, especially as compared to the US, it can be improved to improve certainty for emerging markets. 

TOWARDS A REGULATORY FRAMEWORK FOR OPINION TRADING IN INDIA

India faces the challenge of crafting a proficient legal framework that can balance innovation with consumer welfare. At present, Indian law does not recognize event-based speculation through opinion markets. The absence of a clear classification, either as gambling, securities, or otherwise, creates legal uncertainty and risks for users. Their legal position cannot be decided by mere analogy to gambling to securities but requires a first-principles inquiry into the economic and public policy objectives involved. This would involve assessing the purpose, risk profile, and utility of opinion trading. 

Firstly, Indian lawmakers must determine the legal character of opinion trading contracts. Opinion trading must not be  prima facie classified as 'gambling'. This risks stifling innovation. Such platforms may arguably align with Hayekian principles of knowledge aggregation and market-based information discovery. Instead, India must consider the intricacies of these instruments and assess if certain kinds of the same can be classified as a new category of event-based speculative instruments, distinct from gambling and financial derivatives. 

Secondly, based on the classification, a definite body having jurisdiction over opinion trading platforms and instruments should be identified. If the classification bears resemblance to financial instruments, SEBI can be empowered, through legislative amendments to supervise and regulate opinion trading. For non-financial outcomes like elections, a UK-style Gambling Commission model can be considered. Multi-sector cooperation  is essential given their hybrid  and sector-agnostic nature.

Thirdly, India could benefit from adopting a regulatory sandbox model to enable controlled testing of opinion trading platforms. However, any framework must incorporate adequate consumer protection mechanisms, involving transparency and sufficient risk disclosure. To prevent abuse of addiction risks, a cognitive vulnerability audit must also be performed as a tool based on user and behavior surveys to evaluate susceptibility to addictive usage.

The emergence of opinion trading platforms offers both a puzzle and an opportunity. India must avoid blanket criminalization of opinion trading. It should strive for a principles-based regulatory approach that accommodates the evolving nature of these instruments and platforms while preventing consumer harm and fostering innovation.  By doing so, India can transform opinion trading from a grey-area activity to a legitimate market tool, creating a future-ready regime.