Japanese LDP Parliamentary Group Begins Review of Prediction Markets

Japan's ruling Liberal Democratic Party (LDP) parliamentary group is set to begin examining the possibility of implementing prediction markets, which allow trading on the outcome of future events such as election results or economic indicators.

According to NADA News, a LDP parliamentary group called the Digital Advanced Finance Parliamentary Alliance has identified prediction markets as one of its main discussion topics. The alliance was formed by expanding the Commodity Futures Promotion Parliamentary Alliance, which aimed to activate commodity futures trading by 2023, with participation from internet banks, securities firms, and digital asset exchanges discussing financial system digitization.

Prediction markets allow participants to bet on the likelihood of specific events, such as BTC price movements, U.S. midterm election results, or sports outcomes. Participants buy or sell products based on their predictions, earning profits or losses depending on whether their forecasts match actual results.

Major prediction market platforms in the U.S., including Kalshi and Polymarket, have seen rapid growth in trading volumes related to elections and economic indicators, becoming notable sources of information comparable to polls. Monthly trading volume in these markets has reached hundreds of billions of dollars, with forecasts predicting the market could reach $1 trillion (approximately 137.7 trillion yen) by 2030.

However, ethical and regulatory concerns persist around prediction markets. New York State Attorney General recently sued Coinbase and Gemini in April for offering prediction market services deemed illegal gambling under state law, seeking $3.4 billion (about 468.18 billion yen) in damages.

In Japan, the same day as the U.S. legal action, a parliamentary committee discussed prediction markets. Representative Shuichi Harada of the Constitutional Democratic Party mentioned that prediction markets are rapidly growing as a new information market distinct from polls, and asked the government whether they could be used for economic forecasts or disaster response. Financial Services Agency official Toshitake Inoue explained that while there is no specific law regulating prediction markets directly, there's potential for them to be classified as illegal gambling under Article 185 of the Penal Code, urging caution.

Under current Japanese law, the legal status of prediction markets remains unclear. The structure where participants bet their funds on outcomes that could result in financial gain or loss resembles the definition of 'gambling' under criminal law, creating uncertainty for foreign market operators seeking to enter Japan's market.

The LDP parliamentary group has formally included prediction markets as a discussion topic, signaling potential acceleration in regulatory discussions within Japan. A LDP source told NADA News that several Japanese businesses are showing interest in prediction markets, with Kalshi and Polymarket executives planning visits to Japan soon.

Another party official clarified that the current stage is not yet about formal regulation but rather gathering information and understanding global market trends and regulatory developments. The parliamentary group plans to consult with major U.S. prediction market operators and domestic industry participants to identify key regulatory issues.