Canadian regulators have clarified that prediction markets offering sports event contracts will not be treated as securities or derivatives, signaling a firm stance against their expansion in Canada
Canadian regulators have issued new guidance that effectively blocks the expansion of prediction markets tied to sports and entertainment events. The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) have jointly stated that such event contracts will not be regulated as securities or derivatives, closing the door on platforms seeking to operate in this space under existing financial market rules.
Regulatory Guidance on Event Contracts
The CSA and CIRO, representing a broad coalition of provincial, territorial, and national investment regulators, released a letter clarifying their position. According to the guidance, contracts based on the outcome of sports or entertainment events do not qualify as financial products under Canadian securities or derivatives legislation. As a result, CIRO will not approve dealer members to facilitate or trade these types of event contracts, regardless of growing interest from prediction market operators.
Stan Magidson, chair of the CSA and CEO of the Alberta Securities Commission, emphasized that event contracts focused on sports or entertainment outcomes should not be treated as financial instruments. This position stands in contrast to the United States, where the Commodity Futures Trading Commission (CFTC) has allowed certain platforms to argue for federal oversight of event contracts, sometimes leading to disputes with state gaming regulators.
Limited Authorization and Future Restrictions
The letter from CSA and CIRO acknowledged that two CIRO dealer members currently have limited authorization to facilitate trading in a narrow set of event contracts. However, these permissions are subject to strict terms and conditions, and the regulators warned that further restrictions or changes could be imposed at any time. Any entity trading or facilitating event contracts that do fall under securities or derivatives definitions must comply with all applicable Canadian laws and regulations.
This approach is intended to prevent prediction markets from bypassing gambling regulations by framing their offerings as financial products. In the U.S., several states and attorneys general have taken legal action against major prediction market operators such as Kalshi and Polymarket, arguing that their event contracts constitute unlicensed gambling. The Canadian Gaming Association (CGA) has publicly supported the regulators' guidance, describing it as a clear and practical boundary for the industry.
Implications for Operators and Players
For operators hoping to launch or expand prediction markets in Canada, the new guidance means that contracts based on sports or entertainment outcomes will not be approved under current securities or derivatives frameworks. This effectively limits the legal avenues for such platforms to operate, and signals that any attempt to reclassify these products as financial instruments is unlikely to succeed with Canadian regulators.
Players interested in prediction markets should be aware that, under this guidance, access to sports event contracts will remain restricted in Canada. The regulatory stance also means that any future changes to the legal status of these products would require a significant shift in policy or new legislation. For context, the Responsible Online Gaming Association recently introduced voluntary standards for gambling advertising, reflecting a broader trend of regulatory scrutiny in the Canadian market. More details on these advertising standards can be found in this coverage of new voluntary marketing guidelines.
Event contracts, sometimes called prediction-market contracts, are agreements that pay out based on the outcome of a specific event, such as a sports game or election. Unlike traditional sports bets, these contracts are sometimes structured to resemble financial derivatives, leading to regulatory debates over their classification. In Canada, the latest guidance makes clear that contracts tied to sports or entertainment outcomes will not be treated as securities or derivatives, and will remain outside the scope of financial market regulation unless future policy changes occur.
