Canadian Lottery Coalition Pushes Back on Prediction Markets

Canada's securities regulators have drawn a line on prediction markets, but the country's lottery corporations say it isn't enough. The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organisation (CIRO) issued a joint notice on Aug. 27, stating that event contracts tied to sports and entertainment outcomes should not be regulated as securities or derivatives. Provincial lottery and gaming corporations, represented by the Canadian Lottery Coalition (CLC), argue the guidance leaves room for prediction markets to expand like unregulated gambling. The coalition has registered to lobby provincial governments for stronger oversight.

CSA and CIRO Say Event Contracts Aren't Securities

The joint notice was published as CSA/CIRO Staff Notice 91-307. It addresses growing interest in event contracts linked to sports and entertainment outcomes. The notice states these products fall outside securities and derivatives legislation in every province. CIRO also said it will not approve dealer members to trade these contracts.

"It is important for investors and market participants to understand that event contracts based on sports- or entertainment-related activities should not be regulated within securities and derivatives legislation," said Stan Magidson, CSA chair and CEO of the Alberta Securities Commission.

Two CIRO dealer members are currently authorized to offer a limited set of event contracts. Wealthsimple and Interactive Brokers Canada can offer contracts tied to financial, economic, and climate outcomes. Sports and entertainment contracts remain off-limits under the new guidance.

Lottery Coalition Says Guidance Falls Short

The CLC represents provincial lottery and gaming organizations across seven provinces. Members include Atlantic Lottery, Loto-Québec, Manitoba Liquor and Lotteries, and British Columbia Lottery Corporation. The coalition says the notice does not go far enough. It argues that event contracts still permitted on investment platforms function much like sports betting.

CLC executive director Molly Cormier told the Globe and Mail the guidance leaves the door open. "We appreciate the further clarity, but I just feel like it's too far to say that it's a line in the sand," Cormier said. "The time to act is now before they expand further in Canada." The coalition contends unregulated growth could divert revenue from provincially run gaming channels, which return proceeds to public services.

CLC Lobbies as Regulatory Review Continues

The CLC has taken the formal step of registering to lobby provincial officials on the issue. It wants governments to impose additional consumer protections on legal prediction market products. CSA and CIRO said their review of event contracts is ongoing. Further guidance could bring additional restrictions down the line. Any dealer member trading event contracts must still meet existing securities and derivatives requirements.

For now, sports and entertainment-linked contracts stay barred from CIRO-regulated platforms. Financial, economic, and climate contracts remain available through Wealthsimple and Interactive Brokers Canada under current terms.

The dispute highlights an ongoing divide between securities regulators and provincial gaming authorities over how to classify these products.