Canada bars sports, entertainment prediction market contracts
Canadian regulators said Thursday that sports and entertainment contracts cannot be sold as securities through regulated dealers. Wealthsimple and Interactive Brokers are affected. A lawyer warned the ban may push users to unregulated markets.
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Regulated prediction markets in Canada cannot offer sports or entertainment event contracts as securities, the country's top securities regulators said Thursday.
The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) issued a joint notice stating that contracts tied to sports and entertainment outcomes should not be regulated as securities or derivatives. CIRO will not allow its member firms to offer such contracts.
Only two regulated contract dealers currently operate under CIRO: Wealthsimple and Interactive Brokers. They can offer event contracts on economic indicators, climate-related events, and financial markets. The regulators said other types of event contracts remain under review.
Noah Billick, a partner at Montreal law firm Renno & Co, wrote on LinkedIn that he understood CIRO's logic, sports and entertainment outcomes are hard to regulate and resemble gaming more than securities. But he raised a concern: given how easily Canadian residents can access unregulated prediction markets, the ban may push users into "less-regulated, shadowy corners of the prediction markets space."
Wealthsimple, which launched a prediction markets app this summer, argued in a whitepaper that dividing derivatives oversight by subject matter is the "wrong approach." The paper said treating sports outcomes as gaming while financial outcomes are securities would be "unworkable." Wealthsimple referred BetaKit to that whitepaper when asked about the regulators' statement.
Wealthsimple's app still displays some sports and entertainment markets, such as bets on Academy Award nominations, with a feature to notify users when they become available in Canada, suggesting the offering is not dead.
Regulation of prediction markets remains unsettled in the U.S. as well. More than 20 states have sued operators like Kalshi and Polymarket over whether their contracts fall under state sports gambling laws.
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