Despite Canada’s restrictions on prediction markets, foreign dealers are allowing bets on Canadian elections, setting the stage for debates on how the burgeoning industry might influence our economy and nation.
The news: Just over $600,000 USD has been wagered on US-based prediction market platforms Polymarket and Kalshi predicting the outcome of Toronto’s mayoral race. Canadians can’t legally bet on the race because authorized dealers, like Wealthsimple (whose chief compliance officer, Hanna Zaidi, sits on BetaKit’s board of directors) and Interactive Brokers, can only offer markets tied to economic indicators, financial markets, and climate trends. That means that $600,000 was wagered either by Canadians using VPNs to spoof their location or foreign speculators. Prediction markets can be swayed by insiders and influence public opinion—meaning those risks are now in effect despite that type of market not yet legally operating here.
As more Canadian players look to provide prediction markets, and Wealthsimple advocates for regulators to expand available markets, a panel of industry experts at the IIC Canada conference in Ottawa on Tuesday discussed the possibility of expanded trading on markets like politics and sports—and were pessimistic about the value an increased presence would bring.
From the source: “You want your capital markets to essentially channel people’s savings into economically productive uses … you want people to invest in companies that are going to build factories,” FAIR Canada executive director Jean-Paul Bureaud said on stage. “If you think about prediction market contracts, it is basically: if I win the bet, I get paid out. If you win the bet, you get paid out. That money never touches the economy.”
The context: Bureaud was joined by business lawyer and Canadian Anti-Monopoly Project fellow Rachel Wasserman, alongside Canadian Association of Broadcasters president and CEO Kevin Desjardins. The speakers touched on prediction markets’ connection to gambling, dismissed their utility as a financial hedging tool, and weighed the implications of young people potentially seeing prediction-market luck as a more reliable way to accumulate wealth than labour.
Final thought: Despite those concerns, Wasserman fears that Pandora’s box has been opened to prediction markets, and Canada may loosen regulations rather than ban the practice outright. However, that prediction hasn’t come true just yet. Last week, Canada’s investment watchdog tightened its rules, saying that, in addition to preventing clients from trading them, brokers can’t advertise unavailable markets like political bets.
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Want to feature a hiring announcement in our list? Email partnerships@betakit.com with the subject line JOBS.
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