
<p>Investment company Wealthsimple is partnering with Kalshi to launch Wealthsimple Predict. It’s an app that’ll allow Canadians to place bets on things like Bank of Canada interest rates, job numbers and long term weather patterns.</p><p><br></p><p>This comes at a time where there’s growing scrutiny on prediction markets in the U.S. for misleading advertising and susceptibility to insider trading. So why are young investors, especially Gen Z, fuelling the demand for prediction markets and other high risk and speculative ways to make money? And what are the risks of companies like Wealthsimple leaning into the gamification of the economy?</p><p><br></p><p>Charles Martineau, Associate Director of Research at the Rotman Financial Innovation Hub at the University of Toronto, joins us to talk about the phenomenon and what the data tells us about who actually wins on prediction markets.</p><p><br></p><p>For transcripts of Front Burner, please visit: <a href="https://www.cbc.ca/radio/fro...
Loading summary
CBC Podcast Announcer
All your favorite CBC podcasts are now available on YouTube. The best in award winning true crime investigations, hilarious comedies, vibrant pop culture conversations and even more audio series are all available on CBC Podcasts YouTube channel. You'll also find exclusive video, first episodes, YouTube shorts and behind the scenes content from our hosts and producers that you can't find anywhere else. So if YouTube is your go to source for podcasts, just search CBC podcasts and hit subscribe and and you'll never miss the latest update.
CBC Promo Voice
This is a CBC podcast.
Jason Marcusoff
Hi, I'm Jason Marcusoff filling in for Jamie Poisson. In the United States, prediction markets like polymarket and California allow you to bet on everything from Trump's next move, how hot it'll be in Paris tomorrow, or if your California town will get destroyed by wildfire. But they haven't been widely available to Canadians. That's about to change. Investment company wealthsimple announced earlier this month that they'll be partnering with Kalshi to launch wealthsimple Predict. It's an app that will allow Canadians to place bets on certain things like bank of Canada interest rates, job numbers and long term weather patterns. Wellsimple and Kalshee are not alone. Questrade is also seeking approval to launch a similar product. This comes at a time when there's growing scrutiny on prediction markets for misleading advertising and risk of insider trading and according to a report by our guest today, dismal chances of actually making any money. So then why are young investors, especially Gen Z, fueling the demand for prediction markets? And what happens when companies like wealthsimple lean into the gamification of the economy? I'm going to talk about all that with Charles Martineau. He's the Associate Director of Research at the Rotman Financial Innovation Hub at the University of Toronto. Hi Charles.
Charles Martineau
Hi. Thanks for having me.
Jason Marcusoff
Thanks for coming on. So to start off, what do you make of the move by Wealthsimple to venture into prediction markets? Why is an investment app venturing into this kind of market wagering?
Charles Martineau
When I've learned about wealthsimple now providing clients or what the investors approaching to bet on prediction markets, my priors was like I think this was actually quite bad. But one have to be very careful because it's not like a very black or white situation here. There's a little bit more nuances. My main concern is especially for the young people, I don't want people to stop doing traditional investment to build long term wealth and then shift or their investing towards prediction markets. That was my biggest concern with prediction market being offered to gain Investors. Now why I said it actually might not be as bad as we think is because in prediction markets people would argue that it provides a hedge for investors. So if you want to hedge some certain risk, for instance, if you want to, if you own a mortgage with a variable rate and you're afraid that the bank of Canada will increase rates next month or the couple next months, then one could just turn operation market and bet on the fact that the bank of Canada might increase the rate so it can provide a form of hedging to investors.
Jason Marcusoff
I want to talk to you about the restrictions on the Canadian market. But first let's take a step back and can you explain to me how prediction market bets or contracts work? I mean if from what I read, basically they're not really like just straight bet on the Blue Jays to break their losing streak tonight. Can you explain how they're different from like straight sports betting?
Charles Martineau
Yeah, there's no BookKey. So the main, the main difference with prediction markets say versus your classical sports gambling website that would be Draftkating bet 365 the scores is that there are no bookie. So pre markets are objective the platform, its objective is to find to match a buyer and a seller. So the platform doesn't take the counter position. Right. So and now pre and markets like to sell themselves to be very different from other sports gambling website is they will say well classical sports gambling website if you're a really good bettor, that platform or, or that that sports gambling website acts like a bookie will give you worse odds or might actually kick you out from the platform. Because if you're too good prediction market platform, that's not what they do. Their objective is to find a buyer and try and match them. So that's the main big difference between prediction market versus traditional sports gambling websites.
Jason Marcusoff
So these markets have a risky reputation but wealthsimple says they are looking out for its clients with quote education and guardrails built in from day one. Also that they have risk reminders and warnings. And what really sets it apart from the US versions of CalShee or Polymarket is that Wealthsimple predicting Canada won't allow bets on politics, sports or entertainment.
CBC Podcast Host 2
In the US you can put money on pretty much anything sports. The Iran conflict.
Charles Martineau
Will Trump say Sleepy Joe this week
CBC Podcast Host 2
even mentions whether someone will say a particular word.
Charles Martineau
They would love to see a guy like Sleepy Joe.
CBC Podcast Host 2
In Canada the scope will be more limited with regulators only approving contracts on climate, financial markets or economic indicators. That's what wellsimple will offer through Kalshi
Jason Marcusoff
and contracts will have to be for events occurring at least 30 days later. That means you can't start one now on what the weather will be like in Toronto tomorrow. Do you think these Canadian markets will be less risky?
Charles Martineau
When I've learned the fact that sports related questions will not be part of the platform of prediction markets offered by wealthsimple right away I felt okay, this is at least a good guardrail to protect against young people developing more maybe gambling addictions. Because we know that these prediction market platform, based on my research, 40% of their revenues come from sports related questions. And also something that's well simple as saying is that they will offer some form of sort of exam or questionnaire before somebody can actually start betting on that platform to make sure they understand what they're doing. But again those sort of questions and tests, maybe it's a great guardrail but I've not seen what are those questions. The way I see it is these platform are trying to play it safe and just to provide the regulators a viewpoint, okay, we want to provide a set of questions that yes, they're definitely not sexy. Probably these are the sort of questions that people can use as for as a form of hedging more than investing. But at the same time it is an they're putting their foot in the door and then eventually they might go back to regulators and see like look, everything is going well and they'll maybe be able to tweak the rules a little bit to gradually offered more categories of question down the road.
Jason Marcusoff
So we haven't seen the official launch of these prediction markets in Canada but that hasn't stopped Polymarket they were handing off flyers at Blue Jays games in Toronto even though it's banned in this province. What kind of access is there for Canadians to prediction markets like California Polymarket
Charles Martineau
up to this point so Calgary for sure you cannot participate because you have to be a U.S. resident. So that's for sure. But for Poly Market, yes, in Ontario even if you use a virtual private network, a vpn, you won't be able to access the platform. But with my co authors1 is based in Montreal and for own research when we did, because we had collected all the data that we could put our hands on polymarket, my co author is based in Quebec and he had no problem to access Polymarket with a vpn.
Jason Marcusoff
Have these apps always been banned in Canada and parts of Canada and why has Canada up till now not permitted them?
Charles Martineau
So first of all, Prediction Market is not a new thing that's a pretty old thing. You can even go back to the late 1800s to find evidence of prediction markets on betting on say US elections. So this idea of prediction market is not new. But when it comes to Canada, the somewhat of a similar market to prediction markets is what we call the binary options. So people can take a bet in the option markets on say will the S&P 500 or the TSX go up by X percent tomorrow? So this in 2017 the regulators in Canada has banned these markets and they only allow these sort of betting to have a 30 day maturity. So because prediction markets, you can take a bet right away, the regulators wait, prediction markets can take a bet on something happening tomorrow that's very similar to what we've banned in 2017 when it comes to these option markets. So they, they bundled prediction markets and options together and then said no, we're not going to authorize prediction markets.
Jason Marcusoff
So how does this fit into what Wealthsimple has been doing since coming on the scene a decade ago as this financial tech company?
Wealthsimple Narrator
As one of Canada's most innovative online investment services, Wealthsimple is an example of fintech innovation at its finest. Hitting a billion dollars in assets is no small feat for any company, let alone one that's only two years old, to put it mildly. The success of this business has turned heads all over the world to Mike and the whole team.
Jason Marcusoff
It's been largely targeting millennials and younger investors. I mean I remember this ad from a few years ago. I'm not sure if you do for their crypto business with cavemen inventing the wheel and others were naysaying this as a fat or Ponzi scheme.
Charles Martineau
I call it the wheel. Should we burn them? Let's just undermine him, make him feel weird.
Wealthsimple Narrator
I don't totally understand it. My friend Leanne's really into it.
Charles Martineau
She's super smart. She got me into shoes really early.
Jason Marcusoff
Oh yeah, she's wearily have shoes.
CBC Podcast Host 2
What if. What if there are two wheels?
Jason Marcusoff
Interesting to look at that in retrospect. But tell me about wealth simple and where they fit in the space and why they of all people are going into prediction markets.
Charles Martineau
And I think if I was one of the CEO of wealthsimple, I would be very tempted to go into prediction markets because the young people are not inclined to start investing in traditional markets anymore.
Wealthsimple Narrator 2
Michael Katchen is the CEO and founder of wealthsimple, a financial tech company that didn't just push the Envelope back in 2014, it replaced it using a paperless online only method of investing. His Marketing strategy, Target Millennials.
Charles Martineau
Am I one of those people that
Kalshi User 1
is like keeping some old dinosaur outdated establishment alive?
Wealthsimple Narrator 2
Now, nearly a decade later, Wealthsimple has more than 3 million clients and manages more than $20 billion in assets.
Charles Martineau
They're far more inclined and far more interested to invest in high variance bets. That's their interest. And so these platform, in order to grow their pool of investors they have to cater to their preferences. So it makes total sense for them to go and try to introduce patient markets. In Canada for instance, in my class I teach fourth year undergrad and for their final exam actually I don't have a final exam. It's a final project and I tell the students you have to write a kind of a mini academic paper and you can choose any topic that is finance related. While more than 20% of my students chose sports, gambling or prediction markets.
CBC Uncover Narrator
Imagine you've been charged with a crime and the only witness pointing the finger at you isn't even human.
CBC Podcast Host 2
I remember thinking are you serious?
Wealthsimple Narrator 2
What is this thing?
CBC Uncover Narrator
It's something artificial created by a mysterious Canadian and it's coming for all of us.
Charles Martineau
A life defining technology crime as we
CBC Uncover Narrator
know it will never be the same.
Wealthsimple Narrator 2
I'm like oh my God, he's lying.
CBC Uncover Narrator
From CBC's Uncover the Expert witness Listen
CBC Promo Voice
ad free on Amazon Music
Jason Marcusoff
Broadly speaking, how have you come to understand the rise in popularity of prediction markets?
Charles Martineau
What led to the rise of prediction markets I think is twofold. First it's well at least in the US a lot of people prefer to bet on sports through pre markets and classical sports gambling website. I think also what led to the rise of prediction markets and especially the way I see prediction market advertised to the young people is really to cater to their nihilism, their economic anxiety. So like because what I see now with young people is that they are facing more labor market constraint. They it's really hard to buy a home, very low steady wage growth. So I think a lot of people have lost faith in the traditional way to invest their money. And so therefore they might say you know what, let's try to swing for the fences and let's go bet on high variance bets. Because anyways they probably know they have low expected outcome of winning but they also feel that the counterpart which is building your wealth in the traditional way is also out of reach.
Jason Marcusoff
Do you view these prediction markets as an investor tool or as gambling? Or maybe it's a false binary gambling?
Charles Martineau
Yes, especially if you don't use it as an investment tool for hedging. So for sure My research I've shown is that if you think you can build long term wealth by bidding, operation, market, the answer is no. Okay. There are only few people can make a lot of money on this platform are those who are either extremely lucky, extremely skillful, but you don't know, so you don't know if it's skill or luck. There's very few of them or they, or they behave as what we call liquidity providers. So they're the ones who make markets. I can go in details on this bit later because it's a little bit technical, but there are just very few makes money. So in fact only 30% of people make money on that platform. But all the wealth is captured by 1% of the, of the winners.
Jason Marcusoff
Yeah, I want to talk to you about your research on this. Like so you've, you've done, you've done this deep dive with some other academics. Only a third of people actually make money on it.
CBC Promo Voice
Yeah.
Charles Martineau
And when you say one third makes money, keep in mind that only among only 1% of all these people that make money out of this 30%. If you look, if you, if you look at all the gains, if you look at all the winners, take 1% of the winners, they're the one who grabbed pretty much all of the gains. And if you look at their, like their properties of who are these people, right. They either made a lot of money because they took, they took like one big bet and you don't. It's really hard for us to infer is it just luck or skill. But most of them, they make money because they behave as liquidity providers. So they make markets the same way as you go, let's say you, you want to exchange your currency into an FX booth, right? When you exchange your king dollars to US dollar, the price that they quote at you, they quote and ask in a bid price. Well that's that the people that do the same thing on prediction markets, they're the one who make their money because they are, they're collecting all these transactions, transaction fees from investors. And something that's really interesting on the platform is that if you look at all the, those who lost money, roughly 19% of the people that lose money, they actually take the right side of the bet, but they lose money because they pay a transaction fee.
Jason Marcusoff
So odds are low that you're going to make money. How does that compare to just retail investors kind of average Joe's day trading or playing the stock markets versus the big institutional investors who probably make all the money?
Charles Martineau
Yeah. So if you want to compare it to day traders. So if there's one classic study in finance that goes back into the. I think it was in the early 2000s, 2000 by researchers called Brad Barber and Terry O'. Dean. They've shown that when online, when it was easy for investors to trade online because the transaction fees were much lower, which was a great investment in finance. Right, because you pay lower transaction fees to trade. But because people were able to see online in real time a lot of information about their portfolio, many people develop a tendency of being overconfident. They have a feeling that they can actually control what they see out there. And they got engaged into day trading. And those who did a lot of day trading versus those who maybe trade once a month, the performance of day traders was far inferior to those who would just trade very infrequently. Now my concern with the same thing with prediction markets is that when you start to introduce like everyday short horizon trading assets, I'm pretty sure some people will develop the same tendency as those who behave like day traders.
Jason Marcusoff
We've talked about how this is, you know, very big in the US right now, but there are a whole bunch of concerns south border about how this is structured. And we did an episode a little while back ago about concerns about insider trading within the Trump administration. Uh, for example, the, the U. A U.S. soldier was directly involved in the capture of Venezuelan President Nicolas Maduro, charged for making a polymarket bet on that. Kalshi CEO Tariq Mansour was questioned on CNBC recently about what his platform is doing to prevent people with insider information placing bets. And he seemed to struggle to answer questions about that. How much of a concern is insider trading when it comes to prediction markets?
Charles Martineau
So insider trading. So it's interesting that people talk about insider trading in prediction markets because insider trading happens in every asset classes, right? It's not a new thing. It still happens in equity markets. So it, so it's not a new thing. So one thing for sure that we've found in our research, if you look at those guys who make a lot of Money, the top 100 winners, none of them we would none of them suggest that they were insiders. So the insider risk is actually lower than we think. However, that should not stop platform to try to combat insider trading. But it's, it's not an easy thing. So at. Because to try to prosecute somebody for insider trading, you need a lot of evidence. Sometimes it's really flagrant. Like the US soldier, for instance, a
CBC Promo Voice
special forces soldier has been arrested after allegedly making more than $400,000 betting on polymarket whether Venezuelan President Nicolas Maduro would be removed from office. This soldier, Gannon Ken Van Dyke is alleged to have participated in the planning and execution of that operation that captured Maduro. The Justice Department tonight.
Charles Martineau
But it takes, it takes a lot of effort from the platform to combat insider trading. But that's something that the government should keep pushing on to make sure because insider trading does not occur now in Canada. The again, if you exclude questions that are related to politics and so sort of insidering related to politics, yeah, it won't occur. But let's say take economic questions, say inflation, right. So you can have somebody at the bank of Canada, if he knows the numbers coming up, that person could trade. Right. But then that would be a bit foolish because this platform, they know where these, these platform like they have the employment history of, of people because, well, people did say that they will look at your income, who you work for and then if they see large bets coming from somebody who works at the bank of Canada, especially before the release of inflation numbers, there's a high chance it's inside trading.
Jason Marcusoff
So the Wall Street Journal put out a report about social media ads that Polymarket was putting out that make it seem like real influencers were making large sums of money on bets they've placed only for those to be proven completely fake. So now polymarket is being sued by the national association of Consumer Advocates to call these ads flagrantly deceptive. And they're being reportedly investigated by the Commodities Futures Trading Commission. From what you know, on your, on your research on prediction markets, what are the dangers of this? Kind of the hype machine behind it.
Charles Martineau
Yeah. So one, one ad that comes to mind is actually was from Kalshi and then the ad was saying it was on TikTok that I've seen and it was a lady that saying, hey look, I was taking some bets on the weather in my town for next week. I've made more money than me driving a Uber. This is a great side gig.
Kalshi User 2
What's my favorite market to trade on in Kalshi culture? Everyone's out there trading sports. I'm trading on the Kalshi culture market. Oscars for best actress. I saw him knit, cried. I would put everything I own on this. I'm not confident. There's rotten Tomatoes. There's best supporting Actor. Who's going to win The Bachelorette season 22. There's so many options.
Kalshi User 1
I don't know why more people aren't doing this. Like I literally made 760 last night like I'm not a trader or anything. My friend literally just told me about this app called Kelshi. You basically pick what you think is going to happen in real life. I saw this one where.
Charles Martineau
So it's, it's yeah. False or like whether there was like false or not.
CBC Uncover Narrator
The.
Charles Martineau
Just the fact that they are trying to promote this as a potential side gig for people is very damaging because there's like I've shown my research this platform it's really hard for somebody to make long term wealth with this. Right. It won't compensate for a like you're better off working at a minimum salary job. You'll make more money there than you're going to be on pre market. So my concern with these, these advertisement is that yeah it really tried to sell this idea as a really successful side gig for people but it's not so and then the fact that they decide to make some advertisements that is false. Well that's even more damaging because he had to really faking. They're really giving the impression to the young people that you can actually make a lot of money.
Jason Marcusoff
You know I imagine there'll be so many eyes on this but I wonder where it's going going Canada. The regulators are creating this very narrow prediction market but could this be the first step that they're going to use to maybe later on down the road let people in Canada trade on political outcomes and celebrity breakups?
Charles Martineau
Well I'm pretty sure that's the platform's potentially long term wish because whatever it takes to build a larger pool of participants on their platform that's what they need. But at the same time maybe not. Maybe they will stick to economic related questions and finance question and magically these people will bet on these questions as a hedging tool more than a betting tool. And if that's the case honestly that could be actually quite good. That's what other of my colleagues here, that's what they like prediction market for. It's really from a hedging perspective.
Jason Marcusoff
Yeah but if they want I'll be curious to know how the regulator responds cuz they'll, they'll want those, those young people who are betting on those other things.
Charles Martineau
Yep.
Jason Marcusoff
Charles, thank you so much for this really interesting conversation. Appreciate it.
Charles Martineau
My pleasure.
Jason Marcusoff
That's all for today. I'm Jason Marcus off. Talk to you tomorrow.
CBC Promo Voice
For more cbc podcasts go to cbc ca podcasts.
Episode: Why are prediction markets coming to Canada?
Host: Jason Markusoff (filling in for Jayme Poisson)
Guest: Charles Martineau, Associate Director of Research, Rotman Financial Innovation Hub, University of Toronto
Release Date: June 30, 2026
This episode delves into the imminent arrival of regulated prediction markets in Canada, with a focus on Wealthsimple's upcoming "Wealthsimple Predict" platform (in partnership with U.S. operator Kalshi). Host Jason Markusoff and academic Charles Martineau discuss why Canadian fintechs are getting into prediction markets, how these platforms operate, concerns about risks and regulation, their appeal to young investors, and the broader implications for investing and gambling in Canada.
| Segment | Timestamp | |----------------------------------------------------|------------| | Episode Introduction and framing | 00:34–02:00| | What are prediction markets? | 03:11–04:22| | Canadian regulatory guardrails | 04:22–06:33| | Historical background & VPNs workaround | 06:33–08:19| | Wealthsimple’s strategy & Gen Z focus | 08:19–11:03| | Nihilism and economic anxiety | 11:38–12:36| | Gambling vs. investing in prediction markets | 12:36–14:43| | Day trading comparison | 14:43–16:14| | Insider trading concerns | 16:14–18:57| | Social media hype and deceptive ads | 18:57–21:16| | Will regulations loosen in future? | 21:16–22:21| | Closing thanks and outro (content ends) | 22:21 |