Karsten Wenzlaff, Advisor
August 26th, 2025
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FAIR Challenges Wealthsimple Prediction Market Plan
September 24, 2026 | NCFA Market Activity | Regulation And Policy, Capital Markets And Market Infrastructure, Wealthtech Investing And Trading, Risk Compliance And Regtech
Canadian Prediction Market Access And Regulation
On September 24, 2026, FAIR Canada challenged Wealthsimple's prediction market proposal for a wider Canadian prediction market. Wealthsimple wants regulators to change how event contracts qualify for retail trading. FAIR wants the current limits to remain unless wider access can be shown to benefit investors and serve the public interest.
Wealthsimple published its proposal on August 4. On August 27, Canadian securities regulators kept sports and entertainment contracts outside securities and derivatives regulation. FAIR has now challenged the remaining case for adding more event contracts to the investment dealer channel.
Wealthsimple Wants New Rules For Prediction Market Contracts
Wealthsimple's August 4 white paper goes well beyond its Predict product. CIRO currently limits authorized dealers to contracts based on economic forecasts, environmental forecasts and financial indicators. Wealthsimple argues that these categories are subjective because similar contracts can fit more than one label or receive different treatment.
Its alternative focuses on who determines the result. Wealthsimple proposes approved settlement sources that include government agencies, established data providers, recognized institutions and selected news organizations. A Canadian unemployment contract could settle using Statistics Canada data, while a Bitcoin price contract could use an established financial benchmark.
The proposal could reach categories that Canadian investment dealers can't offer today. Wealthsimple includes accredited electoral authorities among potential settlement sources even though political event contracts are prohibited. It would still exclude contracts involving death, personal harm, terrorism, the initiation of armed conflict and events where one identifiable person can determine the outcome.
CSA And CIRO Keep Sports Prediction Markets Outside Securities Rules
Canada already opened a narrow regulated route earlier in 2026 when Wealthsimple entered Canada's regulated prediction market. Regulators drew another boundary on August 27 when the CSA and CIRO kept sports prediction markets outside securities rules. The CSA said sports and entertainment contracts shouldn't be regulated under securities and derivatives legislation, while CIRO said it would not approve dealer applications to offer them.
The Canadian market remains tightly controlled. CIRO has authorized two investment dealers to facilitate event contract trading, with offerings limited to economic forecasts, environmental forecasts and financial indicators. Contracts must have at least 30 days to maturity. Leverage is prohibited, along with elections, referendums, political nominations and other political events.
A dealer that wants to offer contracts outside those categories must file another material business change with CIRO. Other event contract categories remain under regulatory review.
FAIR Wants Evidence Before More Contracts Are Added
FAIR doesn't dispute that an event contract can meet the legal definition of a derivative. It disputes what should follow from that classification. Its September response asks regulators to consider investor benefit, capital market purpose, market integrity and the public interest before permitting additional categories for retail trading.
See: Should Prediction Markets Be Allowed To Trade On Disasters?
That conflicts directly with Wealthsimple's settlement source approach. A reliable source can determine the result of a contract, but FAIR argues that it doesn't establish whether the contract belongs in the retail investment market. Reliable settlement and retail eligibility are separate questions in FAIR's analysis.
The two organizations also differ on the economic case. Wealthsimple says prediction markets can aggregate information, produce useful prices and help people hedge risk. FAIR says there isn't enough evidence that Canadian retail investors use the contracts already permitted for those purposes.
The 30 Day Rule Came From Offshore Binary Options
Wealthsimple also wants Canada to revisit its binary options rules. Multilateral Instrument 91-102 was introduced in 2017 after regulators faced widespread fraud involving offshore binary option platforms. Wealthsimple argues that regulated event contracts operate differently because trades pass through regulated dealers, futures intermediaries, exchanges and clearing organizations.
It also questions what the 30 day minimum achieves. A contract can satisfy the rule when it is listed and still trade shortly before expiry. Wealthsimple would rely more on dealer controls including recommended loss levels, deposit limits, cooling periods, trading breaks, self exclusion, education and market surveillance.
The rule still applies directly to prediction markets. Ontario regulators relied on MI 91-102 in a 2025 Polymarket settlement, finding that event contracts offered to Ontario residents included prohibited binary options with less than 30 days to maturity. FAIR argues that shorter contracts can also produce faster turnover and repeated exposure to gains and losses, so changing the rule requires evidence about the investor effects as well as differences in market structure.
Canada Has Participation Data But Little Investor Outcome Data
Wealthsimple says more than one million Canadians have already used prediction markets, mainly through offshore platforms. The figure is based on survey data rather than trading records. An Angus Reid Institute survey of 1,803 Canadian adults found that 4% had used a prediction market.
The same survey found limited interest among people who hadn't used one, while opposition to allowing prediction markets was higher than support. The results confirm that Canadians are participating, but they don't show how customers behave inside a regulated investment account. They also don't establish whether people use these contracts for hedging, forecasting or short term speculation.
The permitted Canadian market can now produce better evidence. Participation, repeat trading, average exposure, realized gains and losses, liquidity and spreads can all be measured. Regulators can also examine attempted manipulation and surveillance events, an issue NCFA has explored through prediction market insider trading and surveillance.
Another useful measure is whether Canadians leave offshore platforms once a regulated option is available here. Wealthsimple argues that some will and dealer data can show whether that happens and whether their trading behaviour changes.
Which Event Contracts Belong In Canada's Regulated Market?
Canada is really deciding three things. The August 27 decision on sports and entertainment shows that a contract can meet one legal test without automatically qualifying for retail trading through an investment dealer.
- Is the contract legally a derivative?
- Which regulator should oversee it?
- Should an investment dealer be allowed to offer it to retail clients?
Wealthsimple wants less focus on the subject of the contract and more on how it works, how the result is settled and what controls the dealer has in place. FAIR wants stronger evidence that adding more contracts would benefit investors and support capital market activity. Canadian trading data can help answer that.
See Regulated Event Contract Infrastructure
The contracts already allowed in Canada can show who is trading, how often, how much they gain or lose and whether enough buyers and sellers show up. Regulators can also see whether a regulated Canadian option pulls users away from offshore platforms. That would give them Canadian evidence to work with instead of relying mainly on legal arguments and overseas trading volumes.
Talking Point
Canada already permits a narrow range of regulated prediction markets. Which additional event contracts should qualify, and what does actual Canadian trading behaviour say about expanding access?
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