Canadian Regulators Approve Limited Rollout Of Prediction Markets

Canadian regulators have approved two firms to offer prediction market products, marking a controlled entry into the sector. Interactive Brokers Canada and Wealthsimple have been authorised by the Canadian Investment Regulatory Organization to offer trading in event contracts.

These contracts will be linked to markets overseen by the Commodity Futures Trading Commission, which regulates platforms such as Kalshi, Polymarket and Crypto.com.

The structure places Canadian firms within a hybrid system. Trading will be offered domestically, but contract resolution and core market infrastructure will remain tied to US-regulated exchanges.

Event contracts classified as derivatives under strict conditions

The Canadian Investment Regulatory Organization (CIRO) will oversee how these products are traded, while the Canadian Securities Administrators (CSA) will coordinate with provincial regulators to ensure consistent enforcement.

Only a narrow category of event contracts will be permitted, including contracts on economic forecasts, environmental outcomes and financial indicators. Each contract must have a minimum maturity of 30 days.

The regulator has classified these instruments as derivatives. As a result, they will fall under existing options trading rules and supervision standards by CIRO and other regulators.

Political and high-risk contracts remain prohibited

The framework excludes several contract categories, such as election outcomes, political nominations, referendums or unlawful activities under Canadian law.

This position reflects CSA’s 2017 ban, which associated short-term binary options with fraud and investor losses.

At the time, former CSA Chair Louis Morisset stated: “Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering.”

The current framework builds on this precedent, restricting event contracts to lawful categories with tighter oversight to reduce the risk of misuse.

Sports-related prediction markets will not be offered under the initial rollout by Interactive Brokers or Wealthsimple, according to reporting by The Globe and Mail.

Investor demand grows as regulators signal tighter oversight

The approval reflects rising interest in prediction markets among investors. These products allow users to trade on probabilities tied to real-world outcomes, offering exposure beyond traditional equities and bonds.

Event contracts can also function as hedging tools. Investors may use them to manage risks linked to inflation, interest rates or environmental developments.

Despite this appeal, concerns persist around insider trading, market manipulation and the similarity between event contracts and betting products.

The Canadian Investment Regulatory Organization has indicated that the current framework may evolve. It stated: “CIRO and the CSA continue to monitor developments with prediction markets and event contracts and intend to issue further guidance which could result in the imposition of further restrictions.”

Canada’s cautious approach is similar to earlier scenarios in the US. By limiting contract types and enforcing derivatives rules, regulators are attempting to balance innovation with investor protection.

Further updates on regulatory developments will be available in the Regulation Section.