When Is Gambling Not Gambling? Canada's stance on Fantasy Sports and Prediction Markets

Canada is experiencing a cultural shift in attitudes towards gambling. Ontario's legal market opening its doors to external operators in 2022, and Alberta following suit this summer, have resulted in increased public interest in gambling and have also opened up discussions on what constitutes gambling and how this impacts society.

At the same time, Gen Z has emerged as a commercial force and is adopting new technologies, games, and formats that involve staking and/or rewards. This combination is putting increasing pressure on regulators.

A 2026 Betterment survey found 26% of Gen Z respondents already classify sports betting as part of their long-term investment strategy, and 60% say they get financial advice from social media.

The delivery layer has changed just as much as the products themselves. Where older generations experienced gambling as a solitary, transactional activity, Gen Z and younger millennials engage around social features, live chat, streamers and community validation.

Loyalty mechanics borrowed from mobile gaming such as leaderboards and achievements now show up across casual and real-money products alike, while a 2024 GoDaddy survey showed that 41% of Gen Z trust an influencer over a business ad, making TikTok and streaming platforms essential in reaching younger players.

These changes are not likely to slow down. Expect more hybrid skill-and-chance formats, deeper gamification, and continued crossover with mainstream fintech apps. One such case is Wealthsimple, a Canadian investment management service, rolling out a prediction platform in Canada. These aren't a threat to the regulated industry, but an indication that conversations need to happen about what defines gambling.

Canada's entire gambling framework runs through one test, and it's stricter than most people assume. An activity is considered illegal gambling under Section 206 of the Criminal Code if three elements are present: a prize, chance, and consideration (an entry fee or payment to play).

Remove any one of those three, and the activity falls outside the section entirely. The part that trips up most new products is chance. Canadian courts, including the Supreme Court, have explicitly rejected the "predominance" approach used in some other jurisdictions, where skill can outweigh chance.

In Canada, any element of chance at all, however minor, is enough to make an activity a "game of mixed chance and skill," which is treated the same as pure gambling under Section 206. Only a genuinely chance-free activity qualifies as a game of pure skill, and pure-skill activities fall outside the Criminal Code's gambling provisions altogether.

Daily fantasy sports (DFS) has been arguing its case for more than a decade. In 2015, the Canadian Gaming Association commissioned a legal opinion from Don Bourgeois, former AGCO general counsel, concluding that DFS is not a pure game of skill under the Criminal Code and should be treated as gambling. However, this has never been tested in court.

Ontario has since split the difference: the AGCO's own iGaming standards classify fantasy sports products as a form of sports betting, meaning any DFS operator serving Ontario players needs to register as a licensed iGaming operator. Everywhere else in Canada, DFS occupies the same space it did in 2015, operating with legal uncertainty.

Free-to-play "social casino" games avoid the question entirely. Slot, poker, and table-game apps that let players wager virtual credits instead of real money don't meet the legal definition of gambling because nothing of monetary value changes hands.

This is one of the fastest-growing industries in North America, with Research And Markets estimating the global social casino industry is worth an estimated $10.08 billion in 2026, on track for $14.42 billion by 2030, with North America its biggest region.

Prediction markets have taken a different route out of the definition altogether. Canadian regulators classify contracts on real-world events – will a rate rise, will a stock hit a price – as financial derivatives rather than wagers, routing them through securities law instead of the Criminal Code.

These markets have huge potential, with monthly trading volume in the US hitting roughly $24 billion by April 2026, nearly double the average monthly betting handle across all legal US sportsbooks, according to Pew Research Centre. Wealthsimple's 2026 rollout of Kalshi event contracts in Canada was approved for economic, financial, and climate markets only; sports and politics were left out.

Whether the public buys that "investing, not gambling" framing is another matter. A February 2026 Ipsos poll for the American Institute for Boys and Men found 61% of US adults see prediction market trading as "closer to gambling," against just 8% who call it investing.

The scale involved is not niche. The Fantasy Sports & Gaming Association puts Ontario's fantasy player base alone above two million, and that's before accounting for players active on unregulated platforms elsewhere in the country.

The clearest picture of who's engaging with these products comes from a November 2025 report by Greo Evidence Insights, the Canadian Centre on Substance Use and Addiction and Mental Health Research Canada, based on survey data from more than 8,000 people. It found roughly one in three young adults aged 18 to 29 had gambled online in the past year.

A separate SSRS Sports Poll, published in May 2026, found prediction market usage in North America follows the same pattern: men aged 18 to 34 are the platforms' single biggest user group, trading on them at more than twice the rate of the general population.

Free-to-play social casino games have a research trail of their own worth understanding, less because of the games themselves than because of what they reveal about player behaviour.

A 2018 CAMH study using Ontario's Youth Gambling Survey found nearly one in eight high school students had played social casino games. Separate Canadian research (Kim et al., 2017) found that 62% of online gamblers had started out on social casino games before gambling for real money.

Public appetite for prediction markets is more cautious. A July 2026 subscriber survey by The Logic found almost 58% of respondents don't support legalising prediction markets in Canada, and more than half don't think existing sports-betting platforms are appropriately regulated in the first place.

Canada isn't the first market to run into this problem. The UK's Gambling Commission closed the "no real money" loophole directly: tradeable in-game items, "skins" that function the same way virtual credits do in a free-to-play social casino app, are treated as a de facto currency the moment they can be traded for value, and betting with them requires a gambling license.

Australia regulates through classification rather than gambling law: rather than litigating whether a loot box or social casino game meets a legal definition of gambling, the Australian Classification Board simply age-gates them, a minimum M rating, meaning recommended for users 15 or over for chance-based loot boxes, and a mandatory R18+, meaning adults over 18 only, for simulated gambling.

Neither is a perfect template, but both show the "is it legally gambling" question isn't the only lever available. Canada's current approach effectively has one: license it or leave it alone.

Ontario and Alberta's regulatory models answer a specific question: how do you safely license and tax a casino-style operator? The harder question is what to do with activities that live in the space in between: a fantasy sports contest, a free-to-play slots app, a Kalshi contract, or even a video game with gambling involved.

None of it meets the legal definition that triggers provincial oversight, and all of it, by the CCSA and Greo's own data, reaches the same young, digitally fluent audience that regulated operators are trying to reach through more conventional channels.

Fantasy football group chats, free-to-play games, and prediction platforms are mainstream, everyday behaviours that sit on legally undefined ground. The current regulatory system was built for online casino and sports betting, and it has failed to anticipate a generation that behaves much differently online.