Canadian securities regulators decline to oversee sports, entertainment contracts for prediction markets, announced a recent Globe and Mail headline

Here’s some of what the article had to say:

• The Canadian Securities Administrators, an umbrella organization made up of provincial and territorial securities regulators, and the Canadian Investment Regulatory Organization, or CIRO, issued a joint statement Thursday clarifying how securities and derivatives laws apply to the growing market of events contracts, which allows users to wager on real-world events.
• The CSA said that in its view, bets relating to sports and entertainment events should not be regulated under securities and derivatives legislation, while CIRO said it doesn’t consider it appropriate to approve or facilitate an application by its dealer members to trade those types of contracts…
• … The new guidance from Canadian regulators doesn’t settle how every type of prediction-market contract will be treated, such as those relating to politics. “With respect to the regulatory status of other types of event contracts not addressed in today’s guidance, assessment is ongoing,” the notice said.
• Liberal MP and former minister Karina Gould, who chairs the House of Commons finance committee, previously told The Globe that she believes prediction markets should fall under Canadian gambling rules and regulations in order to protect consumers.

Meanwhile in the US, The New York Times reported a couple of days later:

• A federal appeals court ruled on Friday that states had the ability to regulate prediction markets, a win for the states in an ongoing battle with federal regulators over who had authority over popular wagering platforms.
• …The nationwide legal battle boils down to a debate over whether prediction markets offer swaps, a type of financial contract that is regulated only at the federal level.
• Judge Ryan Nelson wrote in the opinion issued on Friday that Kalshi’s “sports event contracts were not ‘swaps’ because they were sports bets,” and should be subject to state gambling laws, as a previous federal court had determined. In July, Kalshi had agreed to restrict users in Nevada from wagering on sports, elections and entertainment.
• But the ruling contradicted a decision by Philadelphia’s Third Circuit in April that said Kalshi’s sports event contracts were swaps under the Commodity Exchange Act, which granted them federal pre-emption from state laws.

The Times reported elsewhere: “In total, 20 states are locked in litigation over whether the prediction markets are subject to state laws governing sports betting. Last month, 44 states signed a letter attacking the platforms as a “new form of casino” preying on young people. The same story notes: “Tarek Mansour, the chief executive of Kalshi, argues that what his company offers is fundamentally different from traditional gambling. Kalshi does not serve as the “house,” taking the opposite side of every wager. Instead it matches buyers on each side and generates revenue by charging fees, regardless of whether someone wins or loses.”

One might suggest that the term “new form of casino” could be applied to much of what’s gathered steam in the age of Trump. Science, study and evidence-based policymaking are all but jettisoned, replaced by a mishmash of retrogression, prejudice, cruelty and corruption. It follows that notions of fundamental value, whether economic or moral or anything else, are increasingly displaced by mere assertions, or by complete abstractions, and that in turn the Trump era has been terrific for cryptocurrency and for prediction markets, both of which basically amount to untethered mechanisms for transferring wealth from the gullible to the mendacious (this is best illustrated by the hundreds of millions earned by the Trump family from selling useless cryptocurrency tokens). Prediction markets, whether or not they may strike some as “fun,” or as a legitimate way of levering one’s knowledge over a particular area, are at best useless and at worst utterly pernicious. For example:

• … foreign government officials with access to sensitive U.S. military intelligence can use this non-public information to buy Polymarket’s contracts and see their gains skyrocket at the expense of retail investors. Is the U.S. government going to risk an international incident with a powerful foreign entity over something as trivial as a seemingly isolated case of insider trading? Probably not. In this way, a small number of domestic or foreign elites can profit immensely from the platform that many might dismiss as a new mode of gambling by the uninformed masses. Though not everyone is uninformed, it seems: the New York Times recently observed that, on Polymarket, 0.04% of addresses made roughly 70% of the profits.

It’s bleakly amusing that as cited above a Canadian government minister “believes prediction markets should fall under Canadian gambling rules and regulations in order to protect consumers,” given that consumers plainly aren’t in any meaningful way “protected” from being regularly tempted into throwing their money away. Although it’s not directly an IFRS-related issue, the rise of prediction markets, and the widespread indecision over what to do about them, if anything, is another sign of how issues of disclosure and regulation are too often focused on old-school, tangential issues, fussing over dimes and pennies while doing nothing to stem the venal siphoning of dollars and pounds elsewhere…

The opinions expressed are solely those of the author.