On August 27 2026, CSA staff issued regulatory guidance concerning prediction markets. This is an important development in the regulatory landscape for prediction market platforms in Canada.
CSA and CIRO staff announced that: (1) event contracts based on sports or entertainment events/outcomes should not be regulated within securities/derivatives legislation, and (2) are not appropriate for trading by CIRO dealers.
Staff also state other categories of event contracts may raise questions as to whether they are appropriately characterized as securities or derivatives. At this time, no guidance has been provided on what will constitute “entertainment” or “sports” events or what other categories of events will be excluded. Further guidance is expected to follow.
Earlier this month, Wealthsimple put forward a detailed framework arguing why the CSA should regulate prediction markets under Canadian securities/derivatives legislation and why it would result in better outcomes for Canadian investors. I have also previously written why the CSA should reconsider its existing approach toward prediction markets, including the Binary Options Ban.
In the US, the division of jurisdiction between the state and federal government agencies remains ongoing. The CFTC has previously asserted it has exclusive jurisdiction over prediction market platforms that are DCMs and the CEA pre-empts the application of state laws. However, twenty states are currently involved in litigation over the application of state gaming and gambling laws to prediction market platforms.
