CIRO bulletin creates narrow legal path for Canadian prediction markets

April 13, 2026

Prediction Markets: A Narrow and Ambiguous Path Forward in Canada

Warren Ferguson Stikeman Elliott LLP + Follow Contact LinkedIn Facebook X Send Embed

The prominence of prediction markets in the public eye has exploded over the last two years. Until recently, however, there has been no clear legal path for their operation in Canada. In the first of two recent developments, the Canadian Investment Regulatory Organization (CIRO) – Canada’s national self-regulatory organization that oversees investment dealers, mutual fund dealers, and trading activity – published a bulletin (on March 26, 2026) that has the potential to create such a path. This was followed on April 2, 2026 by a joint statement from CIRO and the Canadian Securities Administrators (CSA) [1] reminding industry participants and investors of their existing obligations under securities and derivatives laws.

The upshot of these developments is that, despite the potential pathway the CIRO bulletin represents for trading in permitted binary event contracts, significant restrictions on the operation of prediction markets, as well as certain critical legal ambiguities, remain.

Overlapping Regulatory Prohibitions on Prediction Markets

Sections 202 and 206 of Canada’s federal Criminal Code set out broad prohibitions on activities related to betting, gaming, and lotteries. These include a prohibition against betting on the result of a contest or contingency as well as prohibitions on conducting schemes to dispose of property based on any mode of chance. [2] Although the antiquated language of these prohibitions does not map perfectly to current gaming operations, the core principles underpinning prediction markets closely resemble those that define gambling. Users have the chance to win money based on the outcome of a future uncertain event. Accordingly, there is a strong argument to be made that, depending on the underlying events involved, prediction markets must operate within a provincially regulated gaming framework that is conducted and managed by the provincial government if they are to legally offer services anywhere in Canada. Activities within such frameworks are generally considered compliant with the Criminal Code provisions just discussed.

Ontario is currently the only province that has set up such a framework under which third-party gaming operators may legally offer services. [3] To offer gaming products in Ontario, a prediction market operator would need to register with the Alcohol and Gaming Commission of Ontario (AGCO) and then enter into an operating agreement with iGaming Ontario, the Crown agency that conducts and manages online gaming on behalf of the province. The operator would then need to comply with the AGCO’s regulatory standards covering game integrity, anti-money laundering, player protection, and responsible gaming. While iGaming Ontario has allowed some existing internet gaming operators to offer “novelty bets” on contingent events in Ontario, no prediction market has yet received approval to operate in Canada.

Separate from the federal gaming prohibitions in the Criminal Code and the complementary provincial gaming frameworks, certain of the Canadian Securities Administrators under the CSA have previously made it clear that certain event-based prediction market contracts are prohibited on the basis that they breach the binary option trading prohibitions set out in Multilateral Instrument 91-102 Prohibition of Binary Options (MI 91-102) and further explained in the Companion Policy. MI 91-102 expressly prohibits advertising, offering, selling, or trading binary options [4] with or to individuals in Canada (other than British Columbia which sets its own rules) where the binary option has a term to maturity shorter than 30 days. Most Canadian jurisdictions have implemented MI 91-102, and thus likely prohibit short-term prediction market event contracts under their respective securities and derivatives laws.

Importantly, the distinction between traditional “gambling” activities and regulated securities trading is not clearly defined under Canadian law. At some point, trading in certain securities and derivatives, activity that is arguably captured by the gaming prohibitions in the Criminal Code, ceases to be “gambling” and becomes an activity that is instead regulated under securities and derivatives laws, or by commodity futures laws. However, it is unclear where that boundary (if any) lies, and there exists potential overlap between the separate and independent legal frameworks described above.

CIRO’s Bulletin and Existing Obligation Reminders

On March 26, 2026, CIRO published a bulletin in respect of “event contracts” intended to capture the operations of prediction markets. The bulletin notes that CIRO has authorized trading by certain registered investment dealer members in a limited set of event contracts that are traded and cleared through certain U.S. Commodity Futures Trading Commission (CFTC) regulated exchanges and clearing houses.

Critically, the bulletin significantly limits the scope of the types of event contracts that may be traded. As noted above, CIRO is only allowing approved registered investment dealer members to trade standardized contracts that are traded and cleared through CFTC-regulated exchanges and clearing agencies. Moreover, the nature of the permitted contracts themselves is significantly restricted.

• Event contracts are limited to the following:
  • Economic Forecasts: such as contracts based on economic statistics related to the amount of sovereign debt, inflation rates, central bank reserve rates, labor markets, and housing;
  • Environment Forecasts: such as contracts based on climate indicators related to the average global temperature; and
  • Financial Indicators: such as US 500 Forecast Contracts that settle based on the daily settlement price of the Chicago Mercantile Exchange (“CME”) E-Mini S&P 500 Futures.
• Event contracts are limited to contracts with a term to maturity of 30 days or longer. For greater certainty, issuing a new threshold in respect of an event contract constitutes a new contract, and this new contract must also have a term to maturity of 30 days or longer. As a result of this requirement, MI 91-102 would have no application to the permitted event contracts, since it exempts binary options having a term to maturity of 30 days or longer.
• Event contracts cannot be based on the outcome of elections, political events, or other events of a political nature such as contracts predicting election results, political party leaders' nominations or referendum results or otherwise offer event contracts based on the outcome of unlawful activities under Canadian federal, provincial or territorial law. Presumably this is designed in part to address federal gaming prohibitions by restricting event contracts that more closely resemble traditional gambling.
• Investment dealer members cannot allow clients to use leverage, including the use of margin accounts, for transacting in event contracts.
• Investment dealer members must notify CIRO in writing and file a material change to business activities application to be authorized to offer permitted event contracts involving economic forecasts, environmental forecasts, or financial indicators. To date, two CIRO investment dealer members have been authorized by CIRO to facilitate trading in event contracts. CIRO has regulatory authority over investment dealer members, so this bulletin clarifies that there now exists a narrow, registered dealer‑member pathway for certain event contracts (as derivatives), subject to strict product constraints and dealer obligations. While the restrictions are significant, the bulletin nevertheless sets the stage to allow authorized CIRO member firms to offer select “prediction market” type products without breaching provincial securities and derivatives laws.

Separate from the new CIRO bulletin published on March 26, 2026, CIRO and the CSA issued a joint press release with CIRO on April 2, 2026, reminding market participants of their existing obligations under securities and derivatives laws. This includes a reminder that those prohibitions set out under MI 91-102 remain in effect. The CSA and CIRO note that “[d]ue to regulators’ ongoing concerns around prediction markets, the CSA and CIRO will also consider whether other regulatory action is required, including changes to the terms and conditions in [the CIRO bulletin]”. The regulators also note that while authorized CIRO members may facilitate Canadian client access to the prescribed categories of event contracts traded on non-Canadian markets, no prediction market has yet been recognized as an exchange or registered as a dealer or exempted from the applicable requirements. The CSA further cautions that a failure to comply with applicable requirements under Canadian securities and derivatives laws may lead to enforcement action.

An Ambiguous Path Forward

Even though CIRO’s new bulletin offers a potential path forward for prediction markets, it remains uncertain whether the event contracts described above are in full compliance with Canadian gaming law which, as noted, is a separate and potentially overlapping regulatory framework. Event contracts, even those that fully comply with Canadian securities and derivatives laws, could potentially violate the gaming prohibitions in the Criminal Code.

The CIRO bulletin makes it clear that only event contracts related to economic forecasts, environmental forecasts, and financial indicators will be allowed, topics not typically associated with traditional “betting”. The fact that permitted contracts are confined to such topics and offered via a fully-regulated dealer pathway may reduce the likelihood they are viewed (or at least prioritized) as “betting” activity. Even if that is not the case, on a practical level, it is difficult to foresee an instance where Canadian law enforcement would attempt to enforce the Criminal Code’s gaming prohibitions in respect of product offerings that are regulated by an appropriate securities regulator.

It is also noteworthy that other potentially applicable securities law or derivatives law-based requirements, such as prospectus and market regulation related requirements, are not mentioned.

Next Steps

Businesses that want to engage in this space must be aware of the significant barriers that currently constrain the operation of prediction markets in Canada. However, the Canadian legal framework in which prediction markets operate continues to evolve at a rapid pace such that we expect that further developments may continue to clarify the scope of permissible activities.

[1] The CSA is the umbrella organization of Canada’s provincial and territorial securities regulators that seeks to coordinate securities and derivatives regulation across the country.

[2] Section 207 of the Criminal Code sets out some few exemptions to the broad prohibitions on lotteries and gaming in Canada. This includes an exemption for any gaming that takes place as part of a provincially regulated scheme. Thus, for any person to offer any gaming products legally in Canada, they must secure approval from provincial regulators and then abide by the rules set out by such regulator. If they do not secure such approval, they may be prosecuted for breaching Canada’s Criminal Code for violating the gaming prohibitions.

[3] Alberta is in the process of setting up such a framework and in the summer of 2026 will become the second Canadian province to allow third parties the opportunity to legally offer gaming services.

[4] The Ontario Securities Commission notes that binary options are based on the outcome of a yes/no proposition, expressed as whether an underlying asset, event or value meets one or more predetermined conditions specified in the contract or instrument, at the time or during the time period specified in the contract or instrument. The specified time or time period for determining whether the predetermined condition or conditions are met can be very short, sometimes hours or even minutes.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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