Prediction Markets in Canada: Gambling or Investment?

Prediction markets have surged in public visibility over the past two years, presenting a novel way for individuals to wager on future events. Historically, operating such markets in Canada has faced significant legal hurdles due to unclear regulatory frameworks. However, recent developments, including a bulletin from the Canadian Investment Regulatory Organization (CIRO) and a joint statement from CIRO and the Canadian Securities Administrators (CSA), suggest a potential, albeit narrow, path forward. These actions aim to clarify the operational landscape, but substantial restrictions and legal ambiguities persist, leaving the fundamental question of whether these markets constitute gambling or investment largely unresolved.

At Casinoble, we monitor these evolving regulatory discussions closely to understand their implications for both operators and participants. This article delves into the complexities of prediction markets in Canada, examining the existing prohibitions, recent regulatory interventions, and the ambiguous future they face. We will explore the core distinctions and overlaps between gambling and investment, and how Canadian law currently grapples with these distinctions in the context of prediction markets.

Regulatory Overlap and Criminal Code Prohibitions

Prediction markets operate by allowing users to buy and sell contracts that pay out based on the occurrence of specific future events. This mechanism closely mirrors the principles of betting and gaming, leading to potential conflicts with Canada’s federal Criminal Code. Sections 202 and 206 of the Criminal Code broadly prohibit activities related to betting, gaming, and lotteries, including schemes to dispose of property based on chance. While the language is dated, the core concept of wagering on uncertain outcomes aligns with the definition of gambling.

Consequently, prediction markets often fall under the purview of provincial gaming regulations. To operate legally across Canada, they typically must be conducted and managed by provincial governments. Ontario is currently the only province with an established framework allowing third-party gaming operators. This requires registration with the Alcohol and Gaming Commission of Ontario (AGCO) and an operating agreement with iGaming Ontario. Despite these requirements, no prediction market has yet received approval to operate in the province. Alberta is also developing a similar framework, expected to launch in the summer of 2026, becoming the second province to permit third-party gaming services.

Securities Law Restrictions and Binary Options

Beyond the Criminal Code, certain Canadian Securities Administrators have previously indicated that specific event-based prediction market contracts violate prohibitions against binary options. Multilateral Instrument 91-102 (MI 91-102) prohibits the advertising, offering, selling, or trading of binary options with individuals in Canada, with exceptions for those having a term to maturity of 30 days or longer. Most Canadian jurisdictions have implemented MI 91-102, suggesting that short-term prediction market contracts could be prohibited under securities and derivatives laws. This creates a complex legal environment where activities might simultaneously touch upon gambling prohibitions and securities regulations.

The distinction between traditional gambling and regulated securities trading is not always clear-cut in Canadian law. While some financial activities might resemble gambling, they are regulated under securities or commodity futures laws. However, the precise boundary where gambling ends and regulated trading begins remains undefined, leading to potential overlaps between these distinct legal frameworks. Understanding these nuances is crucial for anyone considering participation or operation within this space, especially as new avenues for trading event contracts emerge.

CIRO’s Bulletin and Event Contract Framework

On March 26, 2026, CIRO issued a bulletin that could pave the way for trading certain ‘event contracts,’ a category intended to encompass prediction market operations. This bulletin authorizes registered investment dealer members to trade a limited set of event contracts, provided they are cleared through U.S. Commodity Futures Trading Commission (CFTC)-regulated exchanges and clearing houses. This development offers a regulated pathway for specific types of prediction market-like products.

However, the scope of these permitted contracts is significantly restricted. They are limited to economic forecasts (e.g., sovereign debt, inflation rates, central bank reserves, labor markets, housing), environmental forecasts (e.g., average global temperature), and financial indicators (e.g., E-Mini S&P 500 Futures settlement prices). Crucially, these contracts must have a term to maturity of 30 days or longer, effectively exempting them from MI 91-102. Furthermore, contracts based on election outcomes, political events, or unlawful activities are prohibited, likely to distance them from traditional gambling. Investment dealers cannot permit clients to use leverage, and they must notify CIRO and file applications to offer these contracts. As of now, only two CIRO investment dealer members have received authorization to facilitate trading in these specific event contracts, demonstrating the narrowness of this new pathway.

Contract Type	Term to Maturity	Prohibited Events
Economic Forecasts	30+ Days	Political, Unlawful
Environment	30+ Days	Political, Unlawful
Financial	30+ Days	Political, Unlawful
Any	< 30 Days	All
Any	N/A	Leverage
Any	N/A	Election Outcomes

Joint Statement and Ongoing Concerns

Following the CIRO bulletin, CIRO and the CSA issued a joint statement on April 2, 2026, reinforcing existing obligations under securities and derivatives laws. This reminder underscores that prohibitions under MI 91-102 remain in effect for contracts not meeting the 30-day maturity exemption. The regulators expressed ongoing concerns about prediction markets and indicated they would consider further regulatory actions, potentially including modifications to the terms outlined in the CIRO bulletin. While authorized CIRO members can facilitate Canadian client access to these event contracts traded on non-Canadian markets, no prediction market itself has been recognized as an exchange or registered as a dealer in Canada. The CSA also warned that non-compliance with Canadian securities and derivatives laws could result in enforcement actions, highlighting the serious implications for market participants.

An Ambiguous Path Forward for Prediction Markets

Despite the CIRO bulletin offering a potential route for certain event contracts, significant ambiguity remains regarding full compliance with Canadian gaming law. Even if an event contract adheres to securities and derivatives regulations, it could still contravene the Criminal Code’s gaming prohibitions. The restriction of permitted contracts to economic, environmental, and financial indicators, rather than political or election outcomes, may reduce the likelihood of them being classified as traditional betting. This focus on less gambling-like subject matter, coupled with a regulated dealer pathway, could mitigate enforcement priorities under the Criminal Code.

Practically, it is unlikely that Canadian law enforcement would pursue Criminal Code gaming prohibitions against offerings already regulated by securities authorities. However, the potential for overlap and conflict between these regulatory frameworks cannot be entirely dismissed. We at Casinoble believe that continued dialogue between regulators and industry stakeholders will be essential to navigate this complex legal terrain. The absence of explicit mention of other potential securities law requirements, such as prospectus and market regulation, also adds to the overall uncertainty surrounding the future of prediction markets in Canada.

Conclusion

The recent regulatory developments in Canada, particularly the CIRO bulletin and the joint statement with the CSA, represent a step towards clarifying the operational landscape for prediction markets. While a narrow pathway for specific event contracts has been established through regulated investment dealers, significant legal ambiguities and restrictions persist. The fundamental question of whether these markets constitute gambling or investment remains a subject of ongoing regulatory scrutiny. The distinction is critical, as it dictates which legal framework applies and the associated compliance obligations. We at Casinoble anticipate that further evolution of these regulations will continue to shape the future of prediction markets, potentially offering clearer guidance on permissible activities and market structures for Canadian participants.