On Nov. 4, Conservative MP Chris d’Entremont crossed the floor to join the governing Liberals, pushing the minority government within two seats of a majority. News outlet Politico broke the story in a piece published at 3:38 p.m. EST.
The decision jolted the world of Canadian politics — and Canadian political betting markets.
Within hours of the news breaking, prediction market Polymarket recorded a major drop in the odds of another federal election being called in 2025. By 8:30 p.m. that evening, bettors put the chances of such an outcome at about five per cent, down from 15 per cent hours earlier.
Anyone with inside knowledge of d’Entremont’s floor-crossing intentions, who had placed a bet on Polymarket before the story broke, could have walked away with a nice profit.
The d’Entremont episode underscores how prediction markets present public officials with opportunities to profit from their inside knowledge. Canada’s top ethics watchdog, Democracy Watch, says this makes a case for prediction-market contracts to be subject to federal ethics laws.
“It’s another area where it just shows the negligence of ethics commissioner[s],” Duff Conacher, Democracy Watch’s co-founder, said at an Oct. 1 press conference.
The law needs to “ … include these new forms of investment that have developed over the last 20 years,” said Conacher, who was in Ottawa to testify in front of a parliamentary ethics committee that is reviewing federal conflict of interest laws.
“Because if a law is not specifically defined, then you cannot hold someone accountable for violating it.”
Volumes up
Prediction markets such as Polymarket are online exchanges where people trade simple yes/no contracts on real-world events — such as election or sports outcomes. A contract’s price reflects the implied probability of a certain outcome.
These markets have exploded in popularity in recent months. Industry leaders Polymarket and Kalshi both facilitated more than US$1 billion in weekly trading volumes in October, up from just US$300 million a week in August.
Bettors regularly place bets on Canadian events on Polymarket.
More than US$120 million was traded on Polymarket over the outcome of the most recent federal election.
There are also markets on whether Canada will strike a trade deal with the U.S., and Bank of Canada rate decisions — both outcomes that hinge on decisions made by public officials.
Federal ethics laws do not currently require public officials to disclose whether they hold any betting contracts, and they do not prohibit public officials from placing bets on platforms such as Polymarket.
However, Canadian securities regulators have banned the sale of binary options since 2017. The Ontario Securities Commission previously held that Polymarket contracts qualify as binary options and fined Polymarket for offering these products to Ontarians.
But no other province has taken similar action, leaving prediction markets in a legal grey area.
Where MPs stand
In response to inquiries from Canadian Affairs, the Office of the Conflict of Interest and Ethics Commissioner declined to say whether prediction-market contracts are regulated by the Conflict of Interest Act. The office confirmed it has not published any public information or notices about them.
Canadian Affairs asked all nine members of the ethics committee currently reviewing Canada’s ethics laws whether they think the law should require public officials to disclose holdings of prediction-market contracts. Only two responded.
Ethics committee vice-chair and Liberal MP Linda Lapointe declined to answer the question.
The legislation should “keep pace with evolving markets and be technology-neutral,” she said in an emailed statement. She added that she would look to “[the ethics] commissioner’s advice on any clarifications to definitions, including how best to address newer financial instruments.”
The other committee member to respond, Bloc Québécois MP Luc Thériault, said he would support the law being updated to require public officials to disclose cryptocurrency and prediction-market contracts.
But Thériault also noted that disclosure alone would not prevent conflicts of interest when office holders remain free to make sector-wide policy decisions that can affect their financial holdings.
“But we must be aware that simply declaring this new type of financial asset will not prevent someone from finding themselves in a conflict of interest situation in the exercise of their government functions,” he said in French in an emailed statement.
In his testimony before the ethics committee, Conacher, of Democracy Watch, argued that public officials should not merely be required to disclose their holdings while in office, but should have to fully divest them.
“And then when they leave, they can reinvest again,” he said.
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