The Invisible Wall: Why Canadians Can’t Trade Predictions on Platforms Like Kalshi
While U.S.-based prediction markets offer Americans a front-row seat to bet on world events, Canadians find themselves outside looking in. Are they missing a revolution in forecasting — or dodging a regulatory minefield?
Prediction markets have been heralded as a futuristic twist on traditional betting, combining crowdsourced wisdom with financial speculation. Is it the wisdom of the crowds or the madness of fools? No one knows, but bets are bets, and humans love to bet. In the last decade, these betting markets, floating on blockchain and web 3.0 technology stacks, have persisted and become legal in the US and other places in the world, allowing individuals and institutions to bet on the future of anything — for a sports result, to the timing of a colony on Mars, and what hit the news lately, US Election Results.
Platforms like Kalshi, Polymarket, and PredictIt are leading this charge in the United States, allowing users to wager on the outcomes of everything from sports and elections to the future price of commodities. These platforms provide a window into public sentiment — and, for many, an opportunity to profit from understanding it. However, for Canadian residents, that window remains firmly shut.
Kalshi was founded in 2018 by Tarek Mansour and Luana Lopes Lara, both graduates of the Massachusetts Institute of Technology (MIT). They envisioned creating a regulated platform where individuals could trade on the outcomes of real-world events, effectively turning everyday uncertainties into investment opportunities. Recognizing the complex regulatory environment in the United States for such a venture, Kalshi embarked on a rigorous approval process with the Commodity Futures Trading Commission (CFTC), the federal agency responsible for regulating derivatives markets like futures and options. After extensive reviews and compliance checks, Kalshi received approval from the CFTC in November 2020 to operate as a Designated Contract Market (DCM). This milestone made Kalshi the first federally regulated event-based trading exchange in the U.S., allowing it to offer event contracts to American residents legally and ensuring that the platform operates under strict regulatory oversight to protect consumers and maintain market integrity.
So yes, since Canada has different regulatory bodies, Kalshi Canada would need to go through similar processes in a country 10 times smaller than it is just emerging into wide-scale legal online betting. It makes more sense to pursue the UK, which welcomes betting and neo-liberal finance instruments to democratize finance and capital markets and has three times the population of Canada.
A Digital Divide: Why Prediction Markets Thrive in the U.S
Kalshi stands out among prediction markets as the first federally regulated event trading exchange in the United States. Launched with the Commodity aboveFutures Trading Commission (CFTC) approval, Kalshi enables Americans to bet on almost any imaginable event with contracts that let users wager the likelihood of different outcomes. Predicting hurricanes, employment numbers, or whether a specific law will pass — the possibilities and potential profits seem endless.
Yet this vast menu of speculation isn’t available to Canadians. With Kalshi limiting access to U.S. residents, Canadians should wonder if they’re missing out on a modern financial tool or wisely avoiding a new frontier of speculative risk.
Regulatory Barriers: The Canadian Dilemma
So, why aren’t Canadians invited to the prediction market party? The answer lies in regulation. Kalshi operates in a tightly regulated niche overseen by the CFTC, which monitors commodity exchanges like the Chicago Mercantile Exchange. This oversight confers legitimacy on Kalshi and ensures that Americans betting on these events have a degree of consumer protection.
However, the CFTC’s jurisdiction is strictly U.S.-based, and its rigorous standards don’t extend across borders. Canadian residents would need their regulatory equivalent, but Canada’s betting laws remain much more conservative. The combination of federal oversight and provincial autonomy creates a patchwork of rules. While a handful of Canadian provinces allow limited sports betting, wagering on non-sport events — particularly political ones — is fraught with complications.
Canada has yet to have a regulatory body dedicated to overseeing prediction markets, which has hampered any domestic attempts at launching such a platform. For companies like Kalshi, expanding into Canada would mean navigating this fractured legal landscape and potentially facing opposition from provinces with strict gambling laws. In essence, Kalshi’s model could be deemed too speculative for a regulatory system that isn’t prepared to handle it.
The Promise and Perils of Prediction Markets
For those who can access them, prediction markets are often viewed as the next frontier in financial speculation. Academics, analysts, and tech enthusiasts hail them as a revolutionary tool for crowdsourcing information. They harness the “wisdom of the crowd” by allowing people with insider knowledge or specialized insights to influence market outcomes. Theoretically, this turns the platform into a real-time barometer of public opinion.
However, there’s a darker side to this optimism. Platforms like Kalshi, PredictIt, and Polymarket have faced accusations of market manipulation and “whale” behaviour — when a single trader with significant capital can drastically influence the odds. For example, Polymarket recently faced allegations that a wealthy French trader singlehandedly skewed the market to support Donald Trump in the 2024 U.S. presidential election. His bets were so large that they effectively “rigged” the perceived likelihood of Trump’s win, raising ethical concerns about transparency and fairness in prediction markets.
This susceptibility to manipulation is one reason why Canadian regulators remain cautious. Imagine a scenario where influential, wealthy individuals or interest groups could use such platforms to shift public perception, especially in elections. Even in the U.S., where prediction markets are relatively mainstream, regulators are wary of their influence.
Assessing Prediction Markets: The Great, The Good, The Bad, The Ugly, and The Uncertain
Prediction markets are complex ecosystems with a range of implications. To better understand their multifaceted nature, let’s examine them through five lenses: The Great, The Good, The Bad, The Ugly, and The Uncertain.
The Great 🎉
1. Power to the People. Enhanced Predictive Accuracy Through Crowd Wisdom
Prediction markets leverage the collective intelligence of diverse participants. Studies have shown that these markets often outperform experts and traditional forecasting methods in predicting outcomes of elections, economic indicators, and other significant events. This enhanced accuracy is attributed to the aggregation of dispersed information, leading to more reliable forecasts.
2. Make a difference. Increased Public Engagement in Civic Issues
The new markets stimulate interest and active participation in civic matters by allowing individuals to invest in the outcomes of political events or policy decisions. This financial stake can motivate people to become more informed about issues, fostering a more engaged and educated populace.
3. Ready Player One. Real-Time Data for Policymakers and Analysts
The dynamic nature of prediction markets provides up-to-the-minute insights into public sentiment and expectations. Policymakers, businesses, and analysts can use this data to make informed decisions, adjust strategies, and promptly respond to emerging trends. Being on supply chains may create new insight into planning contingencies for governments and businesses. These are natural experiments that fit very well into social psychology experiments focused on human behaviour
The Good 😇
1. Power to the People. Financial Opportunities for Informed Individuals
Prediction markets offer a platform where individuals with specialized knowledge or insights can capitalize on their expertise. This democratizes access to financial gains, allowing institutional investors and everyday people to profit from their understanding of specific domains. This betting has real winners — we will likely see our first Polymarket Millionaires in the next couple of years. A key milestone will be the tax treatment of the betting, especially in the market that styles itself as DAOs.
2. The Emperor has no clothes. Transparency in Public Opinion
These markets quantify sentiments and expectations, making public opinion more visible and measurable. This transparency can enhance the democratic process by gauging social trends and concerns. Information solves problems; thefaster and morevalid it is, the more valuable it is.
3. A thousand points of light. Diversification of Financial Markets
Prediction markets introduce a new asset class, enabling investors to diversify their portfolios beyond traditional stocks, bonds, and commodities. This diversification can spread risk and potentially lead to more stable financial returns. Capital is as blind as justice regarding asset classes and market-making. If corporate America can turn a mob-run Vegas into a public company, this is a future for the Kalshi clones in the US.
The Bad 👿
1. Ponzi Palace Possibility. Susceptibility to Market Manipulation
Wealthy individuals or entities can disproportionately influence market outcomes by placing large bets, skewing the odds, and creating misleading signals about an event’s likelihood. This manipulation undermines the integrity of the market and can mislead other participants. Like Bitcoin and Robinhood, wash trades will likely be a sport for the rich and the clever. Money changes everything.
2. Tails they win. Heads, you lose. Ethical Concerns Over Betting on Sensitive Topics
Reasoning: Allowing wagers on natural disasters, terrorist attacks, or political assassinations raises significant moral questions. Profiting from such events can be seen as exploitative and insensitive to those affected by potential tragedies. Did you think betting on the death toll is a good thing? Insurance companies do it every day in one of the most highly regulated environments in the world.
3. The most dangerous game. Risk of Amplifying Misinformation
Participants driven by biases, misinformation, or deliberate disinformation campaigns can distort market predictions. This can lead to inaccurate forecasts that misrepresent the true likelihood of events, potentially influencing public perception and decision-making adversely. “Act as if! Act as if you’re a rich man, and then you’ll surely become rich. Act as if you have unmatched confidence, and then people will surely have confidence in you,” Wolf of Wall Street.
The Ugly 👺
1. The Sting. Potential for Illegal Activities
Unregulated or poorly regulated prediction markets may become conduits for illicit activities like money laundering, insider trading, or funding illegal operations. Criminal elements can exploit the anonymity and financial flows within these markets. These crimes have occurred in public markets, and there is no reason to assume that the same activities will not happen. Just in the American Election, there was over $2 Billion in betting volume, which is an indication of the scale of what can occur. In that flow, a lot of wrongdoing can happen.
2. Think once, vote twice. Undermining Democratic Processes
If prediction markets significantly influence public perception of election outcomes, they could sway voter behaviour, discourage electoral participation, or even affect the legitimacy of electoral results. This undermines the foundational principles of democratic societies. These markets are designed to capture expectations, and it is known that rational and irrational expectations will influence decisions. There is a legitimate concept that the market, if not regulated, could be used to influence elections unfairly. The question will center on who is accountable if an election is unfairly influenced by bets.
3. Brother, can you spare me a dime? Addiction and Financial Harm to Individuals
Similar to other forms of gambling, prediction markets carry the risk of addictive behaviour. Individuals may incur substantial financial losses, leading to personal hardship, mental health issues, and broader social problems. We will know there is an effect when day traders and sports better move to these betting markets if they feel they have a better angle on winning more in these markets. We will also know when gambling addiction diagnoses rise in the countries with these new services.
The Uncertain
1. Regulatory Ambiguity and Legal Challenges
The legal status of prediction markets varies globally, with many jurisdictions needing clear regulatory frameworks. This uncertainty poses risks for operators and users, who may face sudden legal restrictions, fines, or platform shutdowns without warning. This is at the provincial level, and given that it took decades for online sports betting to be legalized, movement will take time as the US and Global experience is analyzed and observed.
2. Long-Term Impact on Traditional Forecasting Methods
It’s unclear how prediction markets will coexist with or disrupt established forecasting industries like polling, financial analysis, and expert consultancy. The potential displacement of these traditional methods raises questions about future employment and the evolution of predictive analytics. An early sign to watch for will be a polling company like Gallup or AC Neilsen move to acquire or compete with the up-and-coming platforms.
3. The Role of Artificial Intelligence and Bots
The increasing use of AI and algorithmic trading in prediction markets could enhance efficiency and introduce risks. Bots might manipulate markets, execute high-frequency trades that outpace human participants, or exacerbate volatility, and the full impact of these technologies remains uncertain. It is obvious that AI Agents and other automated tools will be used to “trade” on these markets as they increase in dollar volume.
By examining prediction markets through these lenses, it becomes clear that they offer significant benefits while posing substantial risks and uncertainties. The same features that make them revolutionary — the ability to crowdsource predictions and engage the public — can also lead to ethical dilemmas and regulatory challenges. Whether Canadians and regulators worldwide will find a way to maximize “The Great” and “The Good” while mitigating “The Bad,” “The Ugly,” and “The Uncertain” remains an open question.
A Missed Opportunity for Canadians?
The allure of prediction markets goes beyond profit; they offer a form of engagement with real-world events. For Canadians, the prospect of betting on their elections, the future of the housing market, or the outcome of environmental legislation could foster an unprecedented level of public involvement.
Proponents argue that Canadians must take chances to turn passive speculation into active, data-driven forecasting. Imagine if Canadian residents could weigh in on issues like the future price of oil — a topic of national significance — by placing their money where their convictions lie. Could these markets make public opinion more visible, accessible, and impactful in real-time?
Critics contend that while the concept is enticing, the real-world effects of prediction markets can be unpredictable. Although participants may theoretically bring informed opinions to these bets, they could quickly bring biases, misinformation, or emotional responses that distort the results. “Prediction markets are only as good as the people using them,” says Julia Leszek, a financial analyst and researcher on digital markets. “If you have enough participants who are more committed to a narrative than facts, these platforms can amplify that bias instead of tempering it.”
Why Canada Might Remain in Regulatory Limbo
If Canada embraced prediction markets, it would likely require a centralized, consistent regulatory approach. This would be challenging under Canada’s current structure, as provinces hold substantial autonomy over gambling regulations. Ontario, for example, has recently expanded its online gambling options but only for sports betting. Introducing broader prediction markets would require complex negotiations between provincial and federal authorities and potentially creating a dedicated oversight body.
Yet even in the U.S., the path for prediction markets isn’t straightforward. Kalshi’s journey to CFTC approval took years of lobbying, adjustments, and legal wrangling. While their contracts are technically legal under U.S. law, the CFTC has clarified that any attempt to enter the political betting space would likely face rejection.
In Canada, even if prediction markets were to gain federal acceptance, they would need to navigate various provincial laws. Moreover, there are open questions about whether Canada’s relatively conservative financial sector would support the development of such a speculative platform. The potential for “manipulation by the wealthy” is an argument often made against expanding these markets, and Canadian regulators take it seriously.
A Global Perspective: What Other Countries Are Doing
Interestingly, while the U.S. and Canada remain hesitant, other nations have shown greater openness to prediction markets. With its well-established betting culture, the UK has longallowed political bets on platforms like Betfair. Australian betting agencies also permit limited political wagers, though these are tightly regulated.
These contrasting approaches highlight different cultural attitudes toward gambling and speculation. While Canadians are no strangers to regulated gambling, prediction markets introduce a complexity that places them closer to financial markets than traditional betting. And with that complexity comes risk.
What’s Next for Canada?
If the prediction market trend grows, Canada might eventually need to consider a more nuanced regulatory framework. The potential benefits are undeniable: greater engagement in civic issues, a new data stream for public opinion, and a tool for policymakers to gauge the popularity of legislation in real-time.
But for now, Canadians are left on the outside looking in, barred from platforms like Kalshi and relegated to watching the evolution of prediction markets from afar. Whether this is a missed opportunity or a prudent avoidance of uncharted risks remains to be seen. As prediction markets continue to develop, Canada faces a choice: adapt and participate or maintain its cautious stance and observe the outcomes from the sidelines.
Endnotes
1. Kalshi’s Regulatory Approval and Structure
— Commodity Futures Trading Commission. “Kalshi Receives CFTC Approval for Event-Based Contracts.” *CFTC Press Releases*, 2021.
Link: [cftc.gov](https://www.cftc.gov)
— Kalshi, Inc. “Terms of Service.” Kalshi, 2024.
Link: [kalshi.com](https://kalshi.com/docs/kalshi-member-agreement.pdf)
2. Canada’s Regulatory Framework for Gambling
— Canadian Gaming Association. “Regulation of Gambling in Canada.” *Canadian Gaming Association*, 2022.
Link: [canadiangaming.ca](https://canadiangaming.ca)
— Ontario Lottery and Gaming Corporation. “Guide to Online Gambling in Ontario.” *OLG Guidelines*, 2023.
Link: [olg.ca](https://www.olg.ca)
3. Polymarket Allegations of Market Manipulation
— “Polymarket Faces Allegations of Manipulation in U.S. Election Betting Markets.” *Techopedia*, November 2024.
Link: [techopedia.com](https://www.techopedia.com/news/trump-election-bets-expose-polymarkets-manipulation-struggles)
— CFTC Investigation Reports. *Commodity Futures Trading Commission*, 2024.
Link: [cftc.gov](https://www.cftc.gov)
4. International Prediction Market/ Examples
— Betfair UK. “A Guide to Political Betting in the United Kingdom.” *Betfair UK*, 2024.
Link: [betfair.com](https://www.betfair.com/politics)
— Australian Gambling Authority. “Regulation of Prediction Markets in Australia.” *AGA Reports*, 2023.
Link: [australiangambling.com](https://www.australiangambling.com)
5. U.S. Political Betting Restrictions
— Commodity Futures Trading Commission. “Limitations on Political Betting and Future Event Contracts.” *CFTC FAQs*, 2024.
Link: [cftc.gov](https://www.cftc.gov)
— PredictIt. “Why U.S. Law Limits Political Betting.” *PredictIt Blog*, 2024.
Link: [predictit.org](https://www.predictit.org)
These sources provide a comprehensive foundation for understanding prediction markets, their regulation, and the unique challenges and opportunities Canadian residents face.
Rob Tyrie is the founder of www.ironstoneadvisory.com and the co-founder of www.greyswanguild.org. He is an industry analyst, software company designer, and strategist. He writes about what may be next and what is essential to major global markets. He has worked in software for almost 40 years and started in the industry as a programmer. It is very likely he generated some code yesterday. This article was created and co-written with AI tools like ChatGPT, Claude.ai and Perplexity.ai. He coined the Conflabularum ergo Sumus, Latin for “We Converse. Therefore we are,” with no apologies to Descartes.
