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 around several thousand dollars. A clinical psychologist, Andrew Kim, characterized prediction markets as another form of gambling, noting structural similarities to traditional gambling activities.

The two major prediction markets, Kalshi and Polymarket, together processed $17 billion U.S. dollars in daily trades in January alone. Major companies, including the NHL, Major League Baseball, Pro Soccer and CNN, have partnered with these platforms.

Unlike traditional gambling, prediction markets operate without a “house,” with users trading directly with each other, and platforms earning revenue through fees. While Kalshi is available nationwide in the U.S., these types of short-term binary options are largely prohibited in Canada.

Critics argue that despite being regulated by the same federal body that oversees commodity futures in the U.S., prediction markets function as gambling. Concerns have been raised about the potential for insider trading and market manipulation, particularly regarding events like the U.S.-Israel and Iran conflict. Polymarket and Kalshi have stated they ban insider trading and are taking steps to prevent it. A recent incident involved a public market account reportedly making $515,000 on the Iran strike just 71 minutes before the news became public.

In March, U.S. lawmakers introduced a bill to ban sports event contracts and casino-style games on prediction markets, and Arizona’s attorney general filed criminal charges against Kalshi for operating an illegal gambling business. Wealthsimple, a Canadian fintech company, recently received approval to operate a limited prediction market, though contracts on elections, political events, unlawful activities, or those under 30 days are prohibited.

Experts note that while prediction markets can aggregate information and potentially offer accurate predictions, the commercialization of these platforms raises concerns about influence peddling and manipulation. Werner Antweiler, who ran a prediction market through UBC for over 20 years, emphasized the difference between pure prediction markets and today’s commercial versions where large bets can influence outcomes.