What exactly are prediction markets? Are they worth the hype, how do they actually work, and are they a safe option, particularly as a later-in-life investment? I’m 62, planning on retiring at 67.
We asked Samer Nusier, vice-president of product and strategy at RBC Direct Investing, to answer this one.
This is a very timely question, and you’re probably not alone in wondering about prediction markets, Mr. Nusier said. Platforms such as Polymarket and Kalshi have been generating considerable buzz, and “with five years until retirement, it’s natural to want to understand whether they fit in your portfolio.”
Here, Mr. Nusier gives us a general overview of what these products are and how to think about them.
“Prediction markets are essentially betting markets on future events,” he said. “You might wager on election outcomes, corporate earnings or even sports and entertainment events, if proponents get their way. The mechanics are fairly straightforward – you buy contracts that pay out if your prediction comes true. This, theoretically, creates odds that reflect the collective wisdom of all participants – think of it as a live, constantly updating poll of what everyone thinks will happen.”
But Mr. Nusier warned that there are significant structural problems with this idea of betting on the future.
“Prediction markets lack the transparency and oversight of traditional investment markets,” he said. “They’re vulnerable to exploitation by insiders who trade on knowledge the rest of the market doesn’t have.”
Canada’s new prediction market guidance leaves key questions unresolved, Wealthsimple CEO says
Mr. Nusier cited this recent example: “In June, 2026, Polymarket, one of the largest prediction market platforms, issued ‘additional context’ to the rules of a bet on whether a particular event would happen by May 31 – even though that deadline had already passed. Critics argued this changed the outcome after the fact, and it wiped out a reported $3.8-million in positions.” In plain terms: Imagine buying a stock, only for the exchange to then rewrite the rulebook and tell you your shares are now worthless.
To your question on these products as an investment, he suggested that prediction markets resemble gambling far more than investing. When you invest in stocks or bonds, for example, you are funding productive enterprises that generate real earnings, create jobs and pay dividends or interest. Returns come from genuine economic growth.
“With prediction markets, you’re simply betting against other often highly sophisticated speculators on what you think will happen, and one person’s gain is another person’s loss,” Mr. Nusier said. “It’s a zero-sum game before fees – and negative-sum after the fees, meaning that collectively, everyone who plays tends to walk away with less than they put in.”
He also suggested how to spot predictions versus investments: When a flashy new financial product generates talk of outsized returns, it tends to only enrich two groups – a small group of sophisticated players with information and tech advantages, and the platforms selling you access.
“For the most part, people in their 60s and approaching retirement may look to reduce risk in their portfolio and prioritize protecting their capital,” Mr. Nusier advised. “When the answer to the question ‘when will I need to rely on this money?’ is ‘soon,’ preserving the money you already have takes centre stage.”
Editorial: The risky bet of prediction markets
This generally means taking on less risk, which typically means a more modest return in exchange for greater peace of mind, he added. Prediction markets don’t fit that strategy, as they are quite high on the risk spectrum and arguably fit more into what he called “entertainment spending” rather than a component of your financial plan.
Mr. Nusier recommended you consult a financial or investment adviser who can review your personal situation in detail. “My general advice would be to avoid get-rich-quick schemes dressed up in a new language. Good investing, particularly as you approach retirement, can often be boring – and that’s exactly the point. It should be disciplined, diversified and designed to get you safely to the finish line, not to thrill you with the possibility of beating the odds.”
Do you want advice on a financial planning or retirement issue that’s affecting you? Send us an e-mail.
