Canada’s securities watchdogs have clarified that contracts allowing users to wager on sports and entertainment outcomes will not fall under securities or derivatives law, effectively barring regulated dealers from offering those products. The joint statement from the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organisation (CIRO) draws a clear line between what can be traded through approved investment platforms and what remains outside their remit.
Regulators draw line on sports betting contracts
The CSA stated that, in its view, bets tied to sporting or entertainment events should not be regulated under existing securities and derivatives legislation. CIRO went further, saying it does not consider it appropriate to approve or facilitate any application by its dealer members to trade such contracts. As the self‑regulatory body overseeing investment dealers, mutual fund dealers and all trading activity on Canada’s debt and equity markets, CIRO’s stance means its members cannot offer these prediction contracts through their platforms.
What the ruling means for platforms like Wealthsimple and Interactive Brokers
Currently, CIRO‑approved dealers are limited to contracts linked to economic indicators, financial markets and climate trends. Sports and entertainment contracts – which have driven roughly 80 % of trading volume on the U.S. platform Kalshi between July 2024 and May 2025 – are now off‑limits for those firms. Wealthsimple, which partnered with Kalshi to provide Canadian access to event contracts, and Interactive Brokers Group both hold CIRO approval but will have to restrict their offerings to the permitted categories. Wealthsimple’s own prediction market app, Wealthsimple Predict, already limits trades to approved contracts; the firm recently removed visibility of non‑permitted markets such as Oscar‑winner bets and the 2028 U.S. presidential race from its website.
US comparison and concerns over insider trading
In the United States, prediction trades are treated as financial instruments, yet lawmakers are debating whether they should be reclassified as gambling products. In March, two U.S. senators introduced the Prediction Markets Are Gambling Act, which would prohibit platforms like Kalshi and Polymarket from offering sports‑linked contracts. Critics highlight risks such as insider trading: a Google engineer allegedly earned over US$1.2 million by betting on search trends on Polymarket, while an American soldier is accused of using classified intelligence to net more than US$400 000 on a bet concerning a military operation in Venezuela.
Ongoing questions about political event contracts
The guidance leaves unresolved how other types of event contracts – particularly those tied to political outcomes – will be treated. The regulators’ notice noted that “assessment is ongoing” regarding the regulatory status of contracts not addressed in today’s statement. Liberal MP Karina Gould, chair of the House of Commons finance committee, has previously argued that prediction markets should be governed by Canadian gambling rules to protect consumers, echoing the debate unfolding south of the border.
Why it Matters
The decision curtails the ability of Canada’s regulated investment industry to tap into a fast‑growing segment of the prediction market that has proved lucrative in the United States. By confining dealers to non‑sports contracts, regulators may push innovative products toward unregulated or offshore channels, potentially reducing consumer protection. At the same time, the move underscores a broader transatlantic divergence over whether prediction markets are financial tools or gambling activities, a distinction that will shape future legislation, market development and investor behaviour in both countries.