Wealthsimple is officially wading into the prediction markets game with a standalone app this summer.
The news: The Toronto FinTech company announced today that it’s releasing Wealthsimple Predict, an app that would give many Canadians their first taste of legal prediction market trading—a type of financial trading that allows users to bet on specific outcomes.
Wealthsimple said the app will host nearly 4,000 event contracts through US predictions exchange Kalshi. These must fall into the categories of contracts Wealthsimple is allowed to offer in Canada: climate-related events, economic indicators such as inflation data, and financial markets (all within a 30-day or longer settlement period).
From the source: Fewer than one in 20 Canadians have ever placed a prediction market bet, according to a study by the Angus Reid Institute released in May. That study also found a significant knowledge gap among different groups of Canadians: 30 percent of young men said they knew a lot about prediction markets, compared to just eight percent of Canadians overall.
Following the thread: Prediction markets are a controversial form of futures trading, which some experts have likened to gambling. But instead of betting against the house, users bet against each other by putting money on whether an event will occur or not.
In the US, Kalshi and competitor Polymarket have been accused of creating environments rife with insider trading; last month, a Google engineer was charged by the Department of Justice for allegedly using confidential company information to win more than $1 million USD on Polymarket trades. Experts have also expressed concerns that prediction betting could influence elections, or other public-interest outcomes.
Final thought: Binary options trading, a common form of prediction trading, has been banned in Canada since 2017. But many Canadians access US prediction markets through VPNs or crypto wallets. Wealthsimple is looking to be a first mover in Canada, as just the second company to be approved by the Canadian Investment Regulatory Organization (CIRO) to offer futures contracts. IKBR currently offers futures trading in Canada, and Questrade has signalled interest in offering the product as well.Â
Disclosure: Wealthsimple vice-president of payments strategy and chief compliance officer, Hanna Zaidi, sits on BetaKit’s board of directors.
Feature image courtesy Wealthsimple.