“Study Warns: Profits Slim in Canada’s Prediction Markets”

Interested in profiting from prediction markets as they expand into Canada? Recent studies indicate that the odds may not be in your favor.

Prediction markets such as Polymarket and Kalshi allow users to bet on the likelihood of real-world events by buying and selling contracts, which, in Canada, will be restricted to events related to economic indicators, financial markets, and climate trends. For instance, current contracts on Polymarket include questions like “Will there be a Bank of Canada rate hike in 2026?” and “Will any month of 2026 be the hottest on record?”

Unlike traditional gambling, prediction markets do not have a house to wager against. Instead, participants compete against each other, with the platforms generating revenue through small transaction fees on each bet.

According to a research paper by scholars from Yale University and London Business School, only about three percent of Polymarket accounts, identified as “skilled traders,” consistently make profits and accurate predictions. The study reveals that a larger group of losing traders essentially fund these profits.

• Hot bet summer? Soon Canadians will be able to trade on prediction markets

As these markets gear up to launch in Canada through Wealthsimple’s collaboration with Kalshi, experts advise Canadians to understand the competition they are facing.

“You need to be sophisticated,” stated Roberto Gómez-Cram, one of the paper’s authors and an assistant finance professor at the London Business School, in an interview with CBC News.

“If you are just clicking away, you will end up losing.”

WATCH | Key points on prediction markets arriving in Canada:

Controversial prediction market betting coming to Canada

June 18|

Duration 2:05

Wealthsimple, a Toronto-based online investment company, is introducing prediction market betting to Canada through its new app, Wealthsimple Predict. Prediction markets enable users to bet on real-world event outcomes, but critics caution that they are akin to another form of risky gambling.

Majority of Users Fund Successful Minority

The unpublished research, drawing data from Polymarket, encompasses $13.76 billion USD in trading volume across 1.72 million accounts.

It suggests that nearly 70 percent of the trading volume comes from less skilled traders, implying that the winners in the market are mainly supported by the errors of the majority.

Since there is no house to bet against, a substantial volume of trades is necessary for the system to operate effectively. The more users engage in contract positions, the more capital flows into the platform, resulting in higher earnings for skilled traders.

Market operators argue that a substantial number