A prediction market — sometimes called a predictive market, information market, or event derivatives market — is a platform where participants buy and sell contracts tied to the outcome of real-world events. Prediction markets are peer-to-peer, so the market itself has no stake in the outcome. Prices move organically as participants trade based on their own research and information.
Types of prediction markets
Not all prediction markets are built the same. Here are the main structural models.
Continuous double auction markets
This works like a stock exchange. Buyers post bid prices, sellers post ask prices, and trades execute when they match. Prices are set entirely by participants, which can produce highly accurate probability estimates in markets with large participant pools — major elections, central bank announcements. The weakness: niche markets with few participants suffer from wide bid-ask spreads and less reliable signals.
Automated market maker platforms
These platforms use an algorithm — a market scoring rule — to act as counterparty on every trade, adjusting prices based on order volume. The advantage: liquidity is always available, making this model useful for smaller or newer markets. The trade-off: algorithmic pricing can lag behind real-world information, meaning prices may not reflect breaking news as quickly as a heavily traded auction market.
Real money vs. play money markets
Some prediction markets use real currency; others use virtual tokens. The distinction matters for accuracy. It’s been seen that real-money markets were more accurate than play-money markets for non-sports events — financial stakes incentivize careful research.
Play-money markets are useful for academic research, corporate forecasting, and jurisdictions where real-money prediction markets are restricted. Some platforms offer prizes or reputation points to top performers.
Blockchain-based prediction markets
Decentralized platforms use cryptocurrency and smart contracts to handle trades and payouts. Smart contracts automatically execute when an event resolves, removing the need for a central authority. Outcomes are verified through "oracles" — designated entities or consensus voting among participants.
Political prediction markets
Elections, referendums, and policy decisions make up the single most popular category globally. These markets gained mainstream attention during recent U.S. presidential elections, where prediction market prices often diverged from traditional polling.
Canadian note: Political prediction markets are not approved for Canadian platforms. The Canadian Investment Regulatory Organization’s (CIRO) framework explicitly excludes political event contracts.
Financial and Economic prediction markets
These cover interest rate decisions, inflation readings, economic indicators such as labour and housing markets, and other financial data points.
Financial and economic event contracts are two of three categories approved for Canadian platforms as of 2026.
Environmental prediction markets
Contracts tied to average global temperature thresholds, extreme weather events, or climate milestones. This category has grown as climate data becomes more granular and publicly accessible.
Environmental event contracts are also approved for Canadian platforms.
Entertainment and cultural prediction markets
Award shows, TV ratings, box office performance, and cultural events. These markets tend to be smaller and more casual, but they can still move significant volume around major events like the Oscars or the Super Bowl halftime show.
Sports prediction markets
Game outcomes, player performance, and season results. Sports prediction markets cover similar outcomes to sports betting, but operate through exchange-based trading rather than fixed odds.
Canadian note: Sports and entertainment prediction markets are not approved for Canadian platforms under CIRO's current framework.
Crypto and blockchain prediction markets
Contracts tied to token prices, protocol upgrades, regulatory developments, and other blockchain-specific events. These markets exist primarily on decentralized platforms and tend to attract a crypto-native audience.
The Canadian regulatory picture in summary
As of March 2026, CIRO has only approved access to trade in economic, environmental, and financial event contracts with terms to maturity of 30 days or longer for Canadian platforms. Political, entertainment and sports contracts remain off-limits.
