How prediction markets work in Canada

The basic idea

A prediction market is an exchange where people trade contracts on whether something will happen. In Canada each one is a yes/no event contract (Interactive Brokers calls them forecast contracts):

• It asks a question with a measurable answer, such as “Will the Bank of Canada cut its policy rate in December?” or “Will Canada’s CPI inflation be above 2.5% in November?”
• It costs between US$0.01 and US$0.99.
• It pays US$1 if the answer is yes for a Yes contract (or no for a No contract), and nothing otherwise.

Because the payout is fixed at US$1, the price reads as a probability. A Yes contract at 35¢ means the market puts the chance at about 35%. If you think it’s more likely, you buy Yes; if less likely, you buy No, which costs about 65¢.

A worked example

Say a contract asks whether the Bank of Canada will hold its rate at its next decision, and Yes trades at 62¢. You buy 50 Yes contracts:

In Canadian dollars, add the cost of converting: at Wealthsimple, 1.5% on conversions under $10,000. Our fee calculator works out the all-in cost and the probability you need just to break even.

Who’s on the other side?

Not the dealer. When you buy Yes at 62¢, someone else holds No at 38¢; together you put up US$1, and the winner collects it. Wealthsimple sends your order through a clearing agent to Kalshi’s order book, where market makers often supply the other side, and says it takes no position itself. Interactive Brokers sends ForecastEx orders to ForecastEx, the exchange it owns, and lists some Kalshi markets too. The dealers earn their money from trading fees, not from your losses.

What Canadians can trade

CIRO’s conditions limit Canadian dealers to three kinds of contract:

• Economic indicators: interest-rate decisions, inflation, unemployment, GDP.
• Financial indicators: stock-index levels, asset prices and other market benchmarks.
• Environmental indicators: temperature, rainfall, storms and other climate data.

Since October 16, 2026, every contract must settle on objective, independently verifiable data from an authoritative source. Sports, entertainment, elections, political events and unlawful activities are off limits, and so is leverage: you can’t trade event contracts on margin. CIRO’s own example of what doesn’t qualify is a contract on whether a company will announce an IPO or an acquisition.

The 30-day rule

Canadian dealers can only offer contracts with a term to maturity of at least 30 days, and a contract with a new threshold counts as a new contract. The rule traces back to Multilateral Instrument 91-102, which has banned selling binary options with a term under 30 days to individuals since December 2017, everywhere in Canada except British Columbia.

In practice, both dealers apply it to how long a contract has been listed. Wealthsimple says you can trade a contract right up to its maturity as long as it was listed at least 30 days earlier, and an Interactive Brokers Canada executive described it the same way. What it rules out are the daily and weekly contracts popular in the US, such as where a stock index closes today.

Prices are in US dollars

Every contract on both dealers is priced and paid in US dollars, because both exchanges behind them, Kalshi and ForecastEx, are American. So you either convert Canadian dollars, which costs 1.5% at Wealthsimple on anything under $10,000 or 0.2 basis points with a US$2 minimum at Interactive Brokers, or you keep a US-dollar balance and trade from it. Both accounts hold the two currencies. See our guide to prediction market fees in Canada.

Getting out before the end

You don’t have to wait for the answer:

• At Wealthsimple you sell your contracts at the current price whenever the market is open, paying the US$0.02 fee again.
• On ForecastEx at Interactive Brokers you don’t sell; you buy the opposite side. Holding both Yes and No locks in US$1 at settlement, and the extra purchase costs another US$0.01 per contract.

Selling early locks in a profit or limits a loss, but in a thin market the gap between the buy and sell price can cost more than the fee. Use limit orders, which set the worst price you’ll accept.

Settlement

When the event is decided, the exchange settles each contract on the data source named in its rules, such as the Bank of Canada’s announcement or Statistics Canada’s release, and pays US$1 on every winning contract. Timing varies by market. Wealthsimple says outcomes can be challenged only within a set window and that it can’t override a settlement; if a payout is more than 48 hours late, it asks you to email its Predict support team.

The risks

• All or nothing. A wrong contract pays zero. Your loss is capped at what you paid, but it’s the whole amount.
• Costs tilt the odds. Fees and currency conversion mean you need to be right more often than the price implies just to break even.
• Thin markets. Some contracts, especially on Canadian data on ForecastEx, trade rarely, so the price can move against you as you trade.
• No advice. Both dealers are order-execution only. Nobody checks whether a trade suits you.
• It can feel like betting. Investor advocates such as FAIR Canada have said event contracts blur the line between investing and gambling. Set a budget, and if it stops being fun, see our guide to gambling help in Canada.

Ready to compare the two dealers? Start with our ranking of the best prediction markets in Canada.