Canadian Regulators Keep Sports, Entertainment Event Contracts Off Limits

Staff of the Canadian Securities Administrators and the Canadian Investment Regulatory Organization said on August 27, 2026 that event contracts based on sports or entertainment events or outcomes should not be regulated under Canadian securities and derivatives legislation, and that CIRO staff do not consider it appropriate to facilitate or approve applications by dealer members to trade them.

The position was published in a joint notice from the two bodies, issued in response to what they described as interest in event contracts based on sports and entertainment events or outcomes. The accompanying staff notice on event contracts provides guidance on how securities and derivatives legislation applies to products commonly described as event contracts, prediction contracts or prediction market contracts.

“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,” said Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission. “This notice provides important clarifications regarding the role and responsibility of Canadian securities regulators when it comes to certain types of event contracts.”

The notice defines event contracts as products whose settlement is based on the outcome of an underlying future occurrence or event, and states they can be structured in different ways, including contracts with a fixed or contingent payout depending on the outcome. CSA staff recognized that such products may fall within the broad definitions of securities or derivatives, but said the legislation, related rules and guidance contemplate that certain instruments sit outside that framework, or are otherwise excluded, depending on the facts and circumstances.

For categories beyond sports and entertainment, the regulators said their assessment is ongoing and that further guidance on event contracts based on other types of events will follow. In the interim, the notice restated that the CIRO investment dealer members authorized to facilitate trading in event contracts may offer only a limited set of products traded and cleared through certain U.S.-regulated exchanges and clearing houses — namely contracts based on economic, environmental or financial indicators. Facilitating trading outside those permissible categories has not been authorized by CIRO or the CSA, and the terms and conditions remain under review and may be subject to further restrictions or other changes.

The notice also emphasized that anyone trading, or facilitating trading, in event contracts that are securities or derivatives must follow applicable requirements, such as registration or recognition requirements. In some Canadian jurisdictions, those requirements include a prohibition under which no person may advertise, offer, sell or otherwise trade a binary option having a term to maturity of less than 30 days with or to an individual.

The CSA is the council of the securities regulators of Canada’s provinces and territories and coordinates and harmonizes regulation for the Canadian capital markets. CIRO is the pan-Canadian self-regulatory organization that oversees all investment dealers, mutual fund dealers and trading activity on Canada’s debt and equity marketplaces.

Earlier Notices Set the Current Categories

CIRO first set out the current framework in a bulletin published March 26, 2026. That bulletin disclosed that two investment dealer members had been authorized to facilitate trading in event contracts, subject to terms and conditions imposed by CIRO in consultation with CSA members. The attached conditions limited offerings to contracts tied to economic forecasts, environment forecasts and financial indicators; barred contracts based on the outcome of elections, political events or other events of a political nature, or on the outcome of unlawful activities under Canadian federal, provincial or territorial law; restricted permissible contracts to a term to maturity of 30 days or longer; and prohibited clients from using leverage, including margin accounts, for event-contract transactions. Any dealer member seeking to offer contracts beyond the listed categories must notify CIRO in writing and file a material change application.

The CSA and CIRO then issued a joint media advisory on April 2, 2026, warning that failure to comply with applicable requirements under Canadian securities and derivatives laws may lead to enforcement action. That advisory stated that no prediction market had been recognized as an exchange or registered as a dealer, or exempted from those requirements, by the CSA, and that the regulators would consider whether other regulatory action was required, including changes to the terms and conditions in the CIRO bulletin.

Industry Positions on Prediction Market Oversight

The August 27 guidance followed the publication of a white paper by Wealthsimple on August 4, 2026, in which the company described itself as the second securities dealer to receive regulatory approval for prediction markets trading in Canada. The paper, authored by Chief Legal Officer Blair Wiley and VP Product Legal and Deputy General Counsel Catherine De Giusti, argued that an event contract is a derivative defined by its structure rather than its subject matter, and said moving some or all prediction markets under gaming laws would not improve the regulatory framework. It described assigning contracts on sports outcomes to gaming regulation while leaving the rest under securities regulation as unworkable, and proposed instead organizing event contracts by their settlement source — the data provider or institutional authority whose published data determines whether a contract resolves. The paper also said the binary-options prohibition was adopted in 2017 in all provinces and territories except British Columbia to address fraudulent offshore platforms, and recommended replacing the 30-day requirement with dealer conduct requirements, including recommended loss limits and responsible trading tools.

The Canadian Gaming Association, which describes itself as the national voice of Canada’s regulated gaming industry, welcomed the guidance in a statement dated August 27, 2026.

“The Canadian Gaming Association welcomes today’s guidance from CSA and CIRO staff. It brings clarity to a question that matters a great deal to Canadian consumers, provincial governments, and the licensed gaming industry: sports wagering is sports betting, whatever the platform, and it belongs within the framework that provinces have built specifically to regulate it,” said Paul Burns, the association’s president and CEO.

The association said it has long held that sports wagering, in whatever form it takes, should be offered only through provincial gaming regulators, and that the framework governing a product should be determined by what it does rather than by what it is called. Its statement described know-your-customer checks, anti-money-laundering controls, responsible-gambling safeguards and integrity monitoring as the foundation of a well-run sports betting market, and said the association is ready to work with the CSA, CIRO and provincial regulators as further guidance is developed.

The regulators said assessment of event contracts based on event types other than sports and entertainment is ongoing, and that further guidance on those categories will follow.