Federal Regulators in Canada Reject Sports Prediction Markets

Canada is taking a very different approach to sports prediction markets than its southern neighbor.

The Canadian Investment Regulatory Organization (CIRO) and the Canadian Securities Administrators (CSA) have issued official guidance on prediction markets. In it, they declare that sports-related markets should not fall under their jurisdiction.

“Investors and market participants need to understand that event contracts based on sports- or entertainment-related activities or outcomes should not be regulated within securities and derivatives legislation,” CSA Chair Stan Magidson shared in a statement. “This notice provides important clarifications regarding the role and responsibility of Canadian securities regulators when it comes to certain types of event contracts.”

The announcement paves the way for gambling regulators to gain authority under these markets, forcing operators into the country’s regulated sports betting markets. 

Currently, only Ontario and Alberta have legalized commercial sports betting. While other Provinces have options, the only legal platforms are run by local lotteries.

While operators may choose to take legal action to counteract the regulator's guidance, the lack of federal protections makes those efforts highly unlikely to succeed.

Could Ruling Put Pressure on the US?

By declaring that sports markets aren’t a form of security trading, Canadian regulators are rejecting the arguments made by the US Commodity Futures Trading Commission.

The federal regulator is currently engaged in legal fights to keep the growing industry from being declared a form of gambling. That action has come despite the majority of Americans and state lawmakers taking the opposite stance. 

While it has pushed through that opposition, Canada’s recent guidance will increase the pressure. It not only publicly refutes the US’s current stance, but also reaffirms the beliefs held by the general public. 

That will add pressure on the current White House administration to end its unpopular fight ahead of the midterm elections, just over two months away.