Financial regulation maintains ban on prediction markets

The CSA and CIRO have recently clarified their position on event contracts linked to sports and entertainment outcomes. The joint notice was clear that the regulators are firm about securities and derivatives legislation not governing these contracts.

CIRO also said it would not facilitate or approve requests from broker-dealer members seeking to trade such products. The position creates another barrier for prediction markets seeking to expand into Canada's sports and entertainment sector.

Canada's framework remains more restrictive than the United States, where prediction markets have gained considerable momentum. Canadian rules allow event contracts tied to economic, financial, or environmental indicators, while contracts involving sports and elections remain prohibited.

The regulators said they may issue additional notices when necessary, leaving the current restrictions in place while providing further clarity on how these markets fit within Canada's financial regulatory framework.

The Canadian Gaming Association (CGA) welcomed the regulators' position, saying it provides greater clarity for consumers, provincial governments, and licensed gaming operators. CGA President Paul Burns argued that strong controls help protect the public from market manipulation.

The association has consistently maintained that provincial gaming regulators should oversee sports betting products; their operation, rather than their label, should determine the regulatory framework.

Industry commentator Allan Asava says:

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The CSA and CIRO positions limit the ability of prediction markets to enter Canada's sports and entertainment betting space. It also reinforces the role of provincial regulators in overseeing sports wagering products, regardless of how operators structure or market them. Although the two categories are different, the regulators' stance might be good news to casino operators.

Things are not the same in the neighbouring USA, where prediction markets continue expanding across sports and other event-based contracts. Canada's regulators appear focused on maintaining a clear separation between financial markets and provincially regulated gaming activities, and the Gaming Association is happy about it.

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