Interested in profiting from prediction markets as they expand into Canada? Recent research indicates that the odds may not be in your favor.
Prediction markets such as Polymarket and Kalshi enable users to bet on the probability of real-world occurrences by trading contracts. In Canada, these markets will focus on events related to economic indicators, financial markets, and climate trends. For instance, current contracts on Polymarket include questions like “Will there be a Bank of Canada rate hike in 2026?” and “Will any month in 2026 set a record for the hottest temperatures?”
In contrast to traditional gambling establishments, prediction markets do not have a house to compete against. Instead, users engage with each other, and the platforms generate revenue through minor transaction fees on each bet.
A study released by scholars from Yale University and London Business School reveals that only a small fraction, approximately three percent, of Polymarket accounts known as “skilled traders” consistently make profits and accurate predictions. The study suggests that a larger group of losing traders essentially fund the gains of these skilled individuals.
With the imminent expansion of these markets into Canada through Wealthsimple’s collaboration with Kalshi, experts advise Canadians to understand the competition they face.
“You need to possess sophistication,” stated Roberto Gómez-Cram, one of the paper’s authors and an assistant finance professor at the London Business School, in an interview with CBC News.
“Simply clicking around will not suffice.”
Majority of users finance successful minority
The unreleased research paper draws data from Polymarket, analyzing a sample containing $13.76 billion US in trading volume across 1.72 million accounts.
It indicates that nearly 70 percent of the trading volume originates from less skilled traders, suggesting that the profits of successful traders are primarily funded by the mistakes of the majority.
Since there is no house to compete against, a substantial volume of trades is necessary for the system to operate. The more users engage in buying contract positions, the more capital flows into the platform, leading to greater earnings for skilled traders.
Market operators argue that when a significant number of individuals bet on an event’s outcome, it creates a form of