The Canadian Lottery Coalition (CLC) is urging for stricter controls on prediction markets following the announcement by financial regulators on Aug. 27 that sports event contracts should not be considered securities.
“We acknowledge the increased clarity, but there is concern that drawing a definitive line might not be necessary,” mentioned Molly Cormier, executive director of the CLC, in an interview with the Globe and Mail. “It is crucial to take action promptly to prevent further expansion within Canada.”
Call for Action by Coalition
As reported by the Globe, CLC has initiated efforts to lobby provincial authorities on this matter.
The CLC is a collective of provincial lottery organizations such as Atlantic Lottery, Loto-Québec, Manitoba Liquor and Lotteries, and British Columbia Lottery Corporation.
In March, the Canadian Investment Regulatory Organization (CIRO) announced the approval for Wealthsimple to engage in prediction market trading for event contracts related to financial markets, economic indicators, and climate.
Legal Boundaries Set by Regulators
CIRO serves as the national body regulating investment dealers, mutual fund dealers, and trading activities on Canadian financial markets.
Interactive Brokers Canada Inc. is the sole CIRO investment dealer member authorized for event contract trading.
The Canadian Securities Administrators (CSA) and CIRO jointly released a notice on Aug. 27 rejecting the growing U.S. prediction market model, where companies like Polymarket and Novig offer sports event contracts nationally with federal oversight from the Commodity Futures Trading Commission (CFTC).
Concerns Arising over Public Revenue
“Investors and market participants must comprehend that event contracts related to sports and entertainment activities should not fall under securities and derivatives legislation,” stated Stan Magidson, CSA chair and CEO of the Alberta Securities Commission.
The CSA coordinates securities regulation across the provinces and territories of Canada.
The CLC argues that prediction-market event contracts, allowing individuals to bet on future outcomes, are essentially forms of gambling that require stricter regulations.
Unlike revenue generated by Crown corporations, prediction-market earnings would not contribute to government funds supporting healthcare, education, sports, nonprofit organizations, as per the CLC.