Someone made big money by betting on Maduro. What are prediction markets, and is it time to tighten their rules?

When will you be there?S. invaded Venezuela? When will that country hand over oil to America? Will the next attack be on Colombia?

a flurry of bets have been made Those questions were raised this week on platforms known as prediction markets, following the U.S. military operation in Venezuela last weekend that ousted President Nicolas Madur.O!

Vishal SuCurrency swapping has brought renewed attention to prediction markets, allowing users to Bet on almost any type of event and in recent years have placed bets on everything from small startups to large companies.

But how do prediction markets work, and how are they regulated? Here’s what you need to know.

How do they work?

Bets on prediction markets are generally binary – bets on a yes/no or high/low outcome.

For example, on Polymarket users can bet on everything Whether certain films will receive Oscar nominations, the fate of the Iranian regime, or the highest temperature in Toronto on a given day.

“The long-term approach is to financialize everything, and make tradable assets out of any differences, Tarek Mansour saidKalshi, CEO of Forecast Markets, at a conferenceReference at the end of 2025.

WhereasThere are many such websites, Polymarket andElshi are the two eldest. And the amount of money coming through the sites has skyrocketed – according to one Report from crypto firms KeyRock and DunemontThe value of bets placed on five of the top forecast markets has increased from US$100 million to more than US$13 billion in early 2024.

Gambling, financial products, or news?

Gaming analyst Dustin Gouker, who publishes the Event Horizon newsletter about prediction markets, says the difference between sports betting platforms and prediction markets is that there is no “house” with the latter.

There are sports betting sites like DraftKings and FanDuel Home. If you lose, you are losing to them. If you lose in the prediction markets, you are losing to another person or market maker,” he said.

Instead, prediction markets make money by charging small transaction fees, Kalshi spokeswoman Elizabeth Diana told CBC News in an email.

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But on a practical level, there’s really no difference, Gouker says.

“Take the logistics out of it, these guys are betting against each other. It’s not who you’re betting against… don’t make it betting.”

also called prediction market they have news valueBecause the bets paint a picture of what people believe will happen based on available information — a “wisdom of the crowd,” Gauker says.

news organizations such as cnn, cnbc And Dow Jones (which owns the Wall Street Journal) has made deals with Kalshi or Polymarket to use the data in their programming.

When it comes to regulation, platforms are treated like financial products and, in the US, are governed by the Commodity Futures Trading Commission (CFTC).

Insider information is a matter of concern

A recent bet on Venezuela proved particularly good and has raised concerns about whether someone may have used insider information to their advantage.

An unidentified gambler, identified only by numbers and letters, bet more than US$30,000 on Maduro being ousted by the end of January, shortly before the military campaign. That bet later paid out more than $400,000 US.

in responseU.S. Representative Richie Torres, a New York Democrat, Sports Authority of Indiad he will introduce legislation This would make it illegal for government officials to use privileged information to place bets on prediction markets.

CFTC has rules against cheating and manipulation, includes insider tradingKalshi also prohibits “Insider trading,” Whereas Polymarket simply says that users should follow the existing laws.

but fourASE says whether investigation and enforcement is ongoingWhat will happen is an open question.

“The question is, do (the CFTC) have the resources? Do they have the will to … conduct those types of investigations?” Chase said.

plus, paPayments on Polymarket are often made using cryptocurrencies and users are often anonymous, which “only increases the risk of illegal activity on those platforms and the work of a regulator.Much, much harder,” Chase said.

What is the situation in Canada?

buy from andBinary options have been banned in Canada since 2017 by the Canadian Securities Administrators (CSA). According to a CSA spokesperson, any prediction market services not covered by that restriction may be considered “securities, derivatives or both”, and will need to comply with existing rules for those products.

“Right now, it’s definitely a gray area,” said Matthew Burgoyne, partner at Calgary-based Osler, Hoskin & Harcourt and chair of the law firm’s digital assets and blockchain group.

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“We haven’t seen a lot of enforcement action in Canada,” Burgoyne said. Ontario Polymarket Bans and Fines In 2025.

Canada-wide binary options regulations don’t even do this It appears that Polymarket has been blocked from being available to Canadians, BurgoThis is what they say. polymarket lists Ontario as a restricted area – but not other parts of Canada, and VPN can be used To get rid of such restrictions (although this is against Polymarket). terms,

“Practically speaking, it is almost impossible for any securities regulator to ban a platform outright,” Burgoyne said.

Both Burgoyne and Chase say more regulations specific to prediction markets are needed to protect users globally.

“History tells us that unregulated markets don’t work — or certainly don’t work well,” Chase said, and the regulations could be used as a blueprint for crypto or stock markets.