Source: The Conversation – Canada
Wealthsimple’s new prediction markets app recently launched, in partnership with Kalshi, an American prediction market platform. It’s only the second firm in the country authorized by Canadian Investment Regulatory Organization (CIRO) to do so, after Interactive Brokers Canada.
Prediction markets allow users to trade and invest in real-world outcomes by purchasing a contract tied to the outcome of a real-world event.
Users typically place a binary yes-or-no bet on a wide range of events: sports outcomes, elections, political events, economic data, corporate earnings, the price of commodities, climate change, geopolitics, cultural events and even entertainment events. Taylor Swift and Travis Kelce’s recent wedding, for instance, generated millions of dollars in wagers.
The price of an individual contract changes based on the probability of the event occurring, with prices fluctuating based on news or speculation around a specific event. Events can be immediate or long-term.
Wealthsimple’s app will give Canadians access to nearly 4,000 of Kalshi’s event contracts, with restrictions. Contracts must have a maturity term of 30 days or longer and are limited to three categories: economic forecasts, environment forecasts and financial indicators.
CIRO has said other categories, including elections, political events like party leadership races or referendum results or contracts tied to unlawful activities under Canadian law, remain strictly prohibited.
A booming global industry
Wealthsimple’s launch is a small entry point into a much larger industry. Prediction markets, while not new, have exploded in recent years as they have become an avenue to wager on virtually anything. Led by Polymarket, Kalshi and Robinhood, they have grown into a billion-dollar worldwide industry with millions of users.
Given that many prediction markets involve a large proportion of wagers on sports events, a growing number of gambling operators such as DraftKings, FanDuel and Fanatics, investment firms like Charles Schwab and tech companies that include Meta are either developing or already running their own.
Prediction markets have been careful to draw distinctions between themselves and gambling platforms. One is structural: individuals bet against other people rather than against the “house,” as they would in a casino or online gambling site.
In this way, operators only act as a clearing house, ensuring the legitimacy of bettors and paying out winners. Their profits are derived from a transaction fee associated with each bet. In essence, because they are not the house, they can never lose the way a casino can.
Winners and losers
Prediction markets have become lucrative for the platforms that run them. Kalshi’s fee revenue for 2025 was US$263.5 million while Polymarket earned US$17.9 million.
Individual traders fare less well. A recent study examining trading gains and losses on Polymarket found that gains are highly concentrated: the top one per cent of users capture 76.5 per cent of profits. The researchers concluded that “insider” trading is unlikely to explain the performance of the platform’s largest winners.
A Wall Street Journal analysis similarly reported that professionals using data-driven algorithmic trading take home most of the winnings.
Insider trading remains a major concern for the sector regardless. In April, a U.S. Army Special Forces master sergeant, Gannon Ken Van Dyke, was charged for allegedly using classified information for personal gain, earning roughly $410,000 from prediction market bets.
According to the indictment, Van Dyke had participated in the planning of the operation that captured former Venezuelan president Nicolás Maduro, and allegedly bet on Polymarket that U.S. forces would enter Venezuela before that operation became public. The allegations against him remain before the court.
Gambling, speculation and investing
There are three main differences between prediction market contracts and online gambling sites.
First, age requirements for online gambling sites are typically 21, while prediction markets often set the minimum age at 18. Second, most online gambling sites have strict enrolment procedures. Third, virtually all online gambling sites provide what the industry calls “responsible gambling” measures and tools, such as self-exclusion, time and money limits, and resources for problem gambling.
Because prediction markets aren’t classified as gambling, few of these safeguards apply to them. Is there cause for concern about problem or disordered gambling as a result?
While the empirical data remains limited, one study found consumers viewed gambling and prediction markets as functionally similar in terms of satisfaction, motivation and perceived legality.
Researchers Philip Newall and Leonardo Weiss-Cohen have described the convergence between online gambling and prediction markets as the “gamblification” of investing. They argue prediction markets have adopted gambling features, including frequent (sometimes immediate) feedback, reward salience and heightened emotional engagement.
That evidence base is still developing, there does appear to be a “meaningful association between problematic gambling and financial trading.”
Calls for stronger protections
That association is already shaping up as a policy question. A recent poll conducted by the U.S. National Council on Problem Gambling survey found broad public support for consumer protections on prediction market platforms. A greater degree of consumer protection appears necessary.
While restrictions are being placed on Canadians trading through CIRO-regulated dealers, it’s easy for people wanting to place bets on events with prediction markets outside Canada.
It remains to be seen whether CIRO will eventually ease its restrictions, or whether provinces will ease restrictions of their own on the types of betting permitted, and how regulators will address misconduct as the scope of trading broadens.
Problem gambling is quickly becoming a public health issue. Ease of access to gambling venues remains a problem, and the growing public acceptance of prediction markets needs to be carefully monitored for its social costs.
Jeffrey Derevensky does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Original source: https://analysis1.mil-osi.com/2026/08/06/wealthsimples-new-prediction-markets-app-exposes-gaps-in-canadas-gambling-protections/