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 both gains and losses. One American user stated they made approximately $200,000 in the past year, while another reported losing several thousand dollars.

Platforms like Kalshi and Polymarket processed $17 billion U.S. dollars in trades in January alone. Major companies, including the NHL, Major League Baseball, and CNN (partnered with Calci), are increasingly involved, lending legitimacy to the concept of “the wisdom of the crowd” as a prediction tool.

Unlike traditional gambling, prediction markets involve trading between users, with platforms earning revenue through fees based on trade volume. While these markets refer to transactions as “trading event contracts,” critics argue they function as gambling. Andrew Kim, a licensed clinical psychologist and addiction researcher, stated that prediction markets share “structural similarities to gambling” and could be considered another form of gambling activity.

Concerns are rising about potential risks, particularly with betting on events like sports and political outcomes. The U.S. Commodity Futures Trading Commission regulates these markets, but some argue this oversight is insufficient. A recent case involved a Polymarket account, “MAGA My Man,” reportedly making $515,000 on a trade related to the Iran strike just 71 minutes before the news became public, raising concerns about insider trading.

In Canada, short-term binary options like those offered by prediction markets are largely prohibited, though 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, politics, unlawful activities, and short-term events.

Researchers like Werner Antweiler at UBC acknowledge the potential of prediction markets as “truth-seeking tools,” but caution that large bets can influence market prices and potentially manipulate outcomes.

Regulatory pressure is mounting. U.S. lawmakers have proposed a bill to ban sports event contracts, and Arizona’s attorney general has filed criminal charges against Kalshi for operating an illegal gambling business. Both Kalshi and Polymarket have announced measures to combat insider trading and restrict betting by individuals with potential influence.

The CBC News broadcast also featured a segment on a rescued Atlantic harbour seal named Regé at the New England Aquarium, who has formed an unusual bond with a rubber duck.