With billions of dollars traded every month, prediction market platforms like Polymarket and Kalshi are breaking new ground for speculative betting.
Initially banned in Canada and now permitted on a limited basis, prediction markets allow people to wager on real-world events by purchasing “event contracts”. Each contract places a bet on a yes-or-no question, such as “Will Lady Gaga perform at the Super Bowl halftime show?”
Because contracts are traded between participants rather than against a casino, there is no “house” setting the odds.
But as prediction markets continue to roll out in Canada, experts are raising concerns about the potential for market manipulation and increased gambling addiction – and say that regulators may be falling behind. Allard Law professor Dr. Cristie Ford explains why regulating new technology can be so challenging and how Canada can bring its regulatory framework up to speed.
Why are prediction markets raising concerns?
Ford: Prediction markets have exploded into public consciousness, but the regulatory regime hasn’t caught up. So far, prediction markets aren’t regulated by gambling regulators, either in Canada or in the US.
If they were, there would be rules about who could participate and rules to try to prevent and detect money laundering. There would also be revenue-sharing agreements supporting schools, hospitals, municipalities and First Nations governments. None of that applies to prediction markets right now.
Prediction markets are also worse than traditional gambling in terms of the odds of winning. People who support prediction markets like to point out that there’s no “house”, so the odds look more even. In reality, the evidence is clear that most people lose. A really important research paper came out in April 2026, showing that the top 1 per cent of users capture 77 per cent of the profits on Polymarket. Another study showed that 84 per cent of Polymarket bets are going to be losers. This is a lot lower than your odds of winning at blackjack or craps in an actual casino.
What's the current legal status of prediction markets in Canada?
Ford: That’s a complicated question! A lot of regulators may have overlapping jurisdiction here. Gambling regulators haven’t waded in around prediction markets yet, but securities regulators sort of have.
Securities regulation in Canada falls under provincial jurisdiction. Since 2017, most provinces’ securities regulators have prohibited the sale of short-term binary options – which most prediction market event contracts resemble – because of concerns about fraud and scams. There are other important prohibitions too, like a ban on trading event contracts related to election outcomes, referendum results and economic and financial events that are less than 30 days away. Betting on things like the capture or assassination of a foreign leader would be clearly offside here, even without the insider trading issues we saw in the US.
Most short-term binary options are going to continue to be prohibited in Canada under securities regulation. We aren’t likely to see a purely made-in-Canada version of Polymarket or Kalshi. However, in late March 2026, Canadian investment dealers got regulatory permission to help their clients participate in prediction markets cross-border. Wealthsimple is the main dealer in this space, but there will be others.
There are lots of ways in which prediction markets don’t really resemble investing, and securities regulation isn’t a perfect fit for dealing with this new phenomenon. A full regulatory solution probably has to involve not just securities regulators, but also gambling regulators and anti-money laundering regimes.
How would you describe Canada’s approach to regulating new technologies? How does the government decide what to regulate?
Ford: New technologies raise really challenging questions for regulators. The first challenge is trying to figure out what the new thing is, and to avoid category errors – for example, treating something as an investment when it’s really a gambling product or vice versa. It’s not always easy to understand what we’re looking at when we’re dealing with something truly new.
The next challenge is figuring out what risks this new thing raises for ordinary people. For example, are youth especially vulnerable on prediction markets, so there should be age restrictions on them as there are on gambling products? Does the gamified nature of prediction markets amplify vulnerability? And, ultimately, who is profiting from these new products and markets, and how? Where are the possibilities for abuse?
Sometimes we adopt a sort of romantic image of innovation, as though all innovation is beneficial almost by definition. But if we don’t understand who is innovating, in what context, for what purpose – and who might be on the losing end – we don’t actually understand what’s happening. I wrote about this in my book Innovation and the State: Finance, Regulation, and Justice.
Some tech CEOs, like Elon Musk, argue for a “free market” and fewer regulations to allow for more innovation. Is there any truth behind regulations stifling innovation?
Ford: That’s not how I see it. That statement presents an image of private sector innovation as some kind of marvelous force of nature, and regulation as just burdensome and wrong-headed. You see the same description around the free market as this pre-existing natural force.
In reality, the market and private innovation are only possible because we have created them through our legal and regulatory arrangements – things like contract law. Especially when we’re talking about intangible products, like financial instruments and event contracts, it’s really hard to avoid this realization.
Intangible financial products are almost infinitely malleable and so they’re just built to fit whatever constraints have been imposed by law and regulation. And many tech products that people think of as having been private sector innovations – like the internet and smartphones – were only possible because of the huge, high-risk, long-term and mission-oriented investments that the state put into them at early stages.
How can Allard Law students engage with issues around technology, innovation and administrative law while in law school?
Ford: Students will learn about Administrative Law through their core coursework and can choose to take Topics in Law & Technology courses, which explore topics like AI and Data-Driven Reasoning for Lawyers; e-Commerce Law; and Innovation & Regulation.
Students also have the opportunity to participate in moots (simulated court proceedings) like the Harold G. Fox Intellectual Property Moot, which deals with topics related to law and technology.
Most of us who teach Administrative Law and other core courses are thinking about how AI in particular is shaping those fields. I think that Securities Regulation is an interesting context for thinking about how regulators are grappling with fast-moving change, but there are lots of other examples. I also teach a seminar on Innovation, Regulation and Law where we discuss the impact of technology, as well as the impact of distrust and polarization.
Learn more about how Allard Law’s new initiative on law, technology and society engages students, faculty, the bar and industry in research, teaching and learning on the legal implications of emerging technologies, including artificial intelligence and digital media.
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