Considering trying your hand at prediction markets as they expand into Canada? Recent research indicates that your chances of success may be slim.
Prediction markets such as Polymarket and Kalshi allow users to bet on the likelihood of real-world events by trading contracts related to economic indicators, financial markets, and climate trends in Canada. For instance, existing contracts on Polymarket involve questions like “Will there be a Bank of Canada rate hike in 2026?” and “Will any month of 2026 be the hottest on record?”
Unlike traditional gambling venues, prediction markets do not have a house to compete against. Instead, participants wager against each other, and the platforms earn revenue through small transaction fees for each bet placed.
A study conducted by researchers from Yale University and London Business School reveals that only about three percent of Polymarket users, identified as “skilled traders,” consistently make profits and accurate predictions. The study indicates that a larger group of losing traders effectively fund the profits earned by the skilled minority.
As these markets gear up to enter Canada through Wealthsimple’s collaboration with Kalshi, experts advise Canadian participants to be aware of their competitors.
“You need to have a high level of sophistication,” stated Roberto Gómez-Cram, co-author of the paper and an assistant finance professor at the London Business School, during an interview with CBC News.
“If you’re just clicking around, you’re likely to struggle.”
Funding of Winners by Average Users
The research paper, yet to undergo peer review, analyzes data from Polymarket, encompassing $13.76 billion US in trading volume across 1.72 million accounts.
It indicates that nearly 70 percent of the trading volume stems from less proficient traders, thus implying that the winners in the market benefit significantly from the errors of the majority.
Given the absence of a house to bet against, a substantial amount of trading activity is necessary for the system to operate efficiently. The influx of funds into the platform increases with more users engaging in contract trading, resulting in more profits for skilled traders.
Market operators suggest that a substantial number of participants betting on an event fosters a form of wisdom of the crowd that