TORONTO – Prediction markets are experiencing significant growth, processing billions of dollars in daily trades, according to a CBC News broadcast. These platforms allow users to trade on the outcomes of events ranging from sports and politics to the weather and even war.

Users interviewed by CBC News reported varied experiences. One American user stated they had earned approximately $200,000 in the past year, while another reported losing several thousand dollars. A clinical psychologist, Andrew Kim, described the platforms as having “structural similarities to gambling,” conceptualizing them as “another form of gambling activity.” He noted the experience of betting on sports through these markets may not differ significantly from platforms like DraftKings.

While regulated by the U.S. federal body overseeing commodity futures, critics argue these markets function as gambling. Sports betting accounted for nearly 90% of Kalshi’s trade volume last year, according to the broadcast.

The anonymous American user interviewed by CBC News described accessing banned platforms like Polymarket through a VPN. He reported experiencing stress after losses, stating, “Whenever you have a heavy loss on prediction markets… it does get stressful. It's always weighing on your mind.” He also noted the platforms are designed to resemble financial markets, creating a sense of legitimacy and reducing stigma.

Recent geopolitical events, particularly the conflict between the U.S., Israel and Iran, have amplified concerns. The user reported losing around $2,000 betting against a U.S. strike on Iran. Trading on war-related events, including speculation about nuclear detonations, raises the possibility of serious real-world consequences and potential insider trading, though both Kalshi and Polymarket now prohibit it. A public market account, MagaMyMan, reportedly made $515,000 in a single day on the Iran strike, 71 minutes before the news became public.

In Canada, short-term binary options, similar to those offered by prediction markets, are largely prohibited under a 2017 ruling. However, users can circumvent these restrictions using VPNs. Wealthsimple recently became the second Canadian company to receive approval to operate a limited prediction market, with restrictions on contracts related to elections, political events, unlawful activities, and those with a timeframe under 30 days.

Experts note that prediction markets have historically served as a tool for aggregating information and potentially providing more accurate predictions than traditional polls. However, Werner Antweiler, a researcher at UBC, cautioned that large bets can influence market prices and potentially sway event outcomes, opening the door to manipulation.

Regulatory pressure is mounting. U.S. lawmakers have introduced a bill to ban sports event contracts and casino-style games on prediction markets, and Arizona’s attorney general has filed criminal charges against Kalshi for operating an illegal gambling business. Both Polymarket and Kalshi are responding by increasing efforts to prevent insider trading and blocking access for certain individuals.