Prediction Markets Advance in the US as Canada Remains Divided

Prediction markets have expanded toward formal regulatory acceptance in the US in early 2026. However, Canadian authorities remain split on how to classify and oversee the platforms. 

Prediction market apps are largely authorized across the US, such as event contract exchanges Polymarket and Kalshi, even as nearly 50 legal challenges have unfolded across multiple states. In Canada, by contrast, provincial and federal officials disagree on whether prediction markets constituted gambling or securities products, and only Ontario has taken direct enforcement action.

In the US, the Commodity Futures Trading Commission (CFTC) regulates prediction platforms as event contract exchanges. The agency recently withdrew a proposed ban on certain political and sports-related contracts and indicated it would instead pursue tailored rules for the sector. 

Regulators are also reviewing surveillance, clearing, and margin frameworks to further align prediction markets with traditional futures oversight. Some federal lawmakers have proposed limits on public officials' participation.

In Canada, no legislation or court ruling explicitly authorizes prediction markets. A 2017 decision by the Canadian Securities Administrators, a regulatory council for territories and provinces, banned short-term binary, yes-or-no options after widespread fraud involving online platforms. 

In 2025, the Ontario Securities Commission determined that Polymarket's contracts violated that earlier order and barred the platform from operating in the province.

Legal experts said prediction market contracts meet the technical definition of binary options because they involve short timeframes and binary outcomes. However, some argued the original ban targeted fraudulent schemes rather than regulated exchanges. 

Other provincial regulators have not clarified whether the 2017 order applies to prediction markets, leaving their status uncertain outside Ontario.

Federal finance officials said provinces are responsible for regulating capital markets, including gambling activities such as prediction markets. Alberta's gambling regulator stated that prediction markets are not currently permitted in the province and that it was developing a regulatory approach as Alberta opens its iGaming market. 

CFTC signals stronger federal defense against state regulators 

As Canada debates classification, the US prediction market regulator announced it had adopted a firmer stance. In a Wall Street Journal opinion piece, CFTC Chairman Michael Selig wrote that the agency had always held authority over prediction markets and would intervene against state efforts to prohibit them. 

He stated that the CFTC would "no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products."

Selig said event contracts operate as swaps under federal commodities law rather than gambling instruments. He described the exchanges as self-regulatory organizations supervised by CFTC staff, rejecting claims that they resembled unregulated markets. In a public video message, he said the agency was prepared to defend its jurisdiction in court and would see challengers there.

He also stated that event contracts have a legitimate economic purpose and contribute to market integrity. The commission signaled it would draft clearer rules governing prediction markets and revisit its involvement in federal and circuit court cases where jurisdictional questions arise.