Canadian securities regulators have clarified that event contracts based on sports and entertainment should not be regulated under the country’s securities and derivatives legislation.
The Canadian Securities Administrators and Canadian Investment Regulatory Organization set out the position in a joint notice responding to growing interest in prediction markets.
CIRO also said it does not consider it appropriate to facilitate or approve applications from its regulated dealer members seeking to trade sports- or entertainment-related event contracts.
The notice defines a regulatory boundary for these products but does not determine their status under other Canadian laws, including any gambling legislation that may apply. The CSA said it is continuing to assess the regulatory position of other categories of event contracts not covered by the guidance.
Commenting on the matter, CSA Chair Stan Magidson, who also serves as Chair and CEO of the Alberta Securities Commission, stated: “It is important for investors and market participants to understand that event contracts based on sports- or entertainment-related activities or outcomes should not be regulated within securities and derivatives legislation.
“This notice provides important clarifications regarding the role and responsibility of Canadian securities regulators when it comes to certain types of event contracts.”
Two CIRO dealer members have previously been authorised to facilitate trading in a limited range of event contracts. Those firms remain subject to conditions established by CIRO in consultation with the CSA, and their activities could face additional restrictions or changes.
The regulators did not identify the two dealers or specify which event contracts they are permitted to offer.
Anyone trading or facilitating event contracts that qualify as securities or derivatives must continue to comply with the relevant legislation, the notice added.
The Canadian guidance comes amid continuing disputes over prediction-market regulation in the US. A Washington court recently ordered Kalshi to restrict several contract categories and introduce additional geofencing, while a CFTC committee has examined self-certification and manipulation risks associated with “mention markets.”
Two CIRO-regulated dealer members are currently authorised to facilitate trading in a limited selection of event contracts
