Samer Nusier, Vice President of Product & Strategy at RBC Direct Investing, talks about why investors seem to be drawn to increasingly risky products, why prediction markets should be regulated as gambling products, and how people should think about the difference between investments and gambling.
It seems like retail investors (at least some) have a growing appetite for higher risk, speculative products. Why do you think this is?
Two key themes are at play here. First, the retail investor has fundamentally changed over the past five to seven years. We're seeing younger people investing earlier, with smaller amounts, and often directly rather than through an advisor. This is largely positive, as time is one of the most important factors in building wealth. But it comes with a trade-off. This new wave of DIY investors came up in a different information era – one shaped by social media and online hype – and it tends to nudge them toward riskier, more speculative products over your traditional portfolio. And too often, without fully considering what that could mean for their money.
Second, the industry has mobilized to monetize this trend. Some of it’s genuinely positive, like lower-cost investment options. Some problematic, like platforms that encourage frequent, speculative trading. And some predatory, think online "learn to trade" courses that promise outsized returns.
Layer in social media amplifying FOMO, and you can end up with a good chunk of retail investors pursuing speculative products and get-rich-quick schemes. The result is a meaningful shift toward higher-risk trading, often dressed up in the language of innovation and democratization.
The real irony? Good investing tends to be boring. Disciplined. Designed to get you to your goals, not to thrill you with the possibility of beating the odds.
Do you see things like prediction markets as outright gambling, or do you think they are different and something that financial institutions should be dipping their toe into, as we have seen in at least one case in Canada?
These are gambling products, packaged as "derivatives" to stretch the definition of what counts as an investment. Thankfully, Canadian regulators seem to have largely recognized that, drawing a clear line by keeping sports and entertainment contracts out of securities regulation.
Prediction markets are built on the theory of the "wisdom of the crowd" – the idea that a group of reasonably informed people will make a better collective estimate than any individual. The theory has some merit, but the products marketed as prediction markets are riddled with problems in how they try to derive those collective estimates.
More important than the technical limitations is this distinction: a real investment puts your money toward something productive – a business, a service or something that creates value – with the expectation of earning a return. Derivatives were originally designed over top of investments to manage risk through hedging. But we’ve seen prediction markets in the U.S. generating the vast majority of their revenue from betting on sports and entertainment. What risk is managed by wagering on whether Connor McDavid scores two or more goals against Florida? None. It's betting, plain and simple.
Canadian regulators have taken a measured approach. They've approved a narrow set of markets that could be used for legitimate risk management – weather and economic indicators as examples – and explicitly said that sports and entertainment contracts are not derivatives. This is sound policy, and I hope they maintain this distinction. With any new financial product, I think the lens should be the same for everyone: does it genuinely serve investors and help them reach their goals?
What about products like these new ETFs announced earlier this year tied to the performance of NHL teams? Is that just another form of gambling dressed up as investment product?
Again, this is a form of gambling. If prediction markets are the equivalent of single-game sports betting, then these NHL team ETFs are FanDuel's Daily Fantasy Sports.
But the bigger issue isn't the products themselves, it's the pattern. The companies behind these offerings are largely driven by profit – with too little weight given to the harm blurring the lines between investing and gambling can cause the general public. And when the misalignment of incentives is this obvious, it’s fair to ask what else might be rolled out to investors under the same banner of “financial” products – and who ends up paying for it.
The question isn't whether these specific products will harm some investors. They will. The question is whether you should trust your retirement to the same companies that want to monetize your sports betting appetite.
How should investors distinguish between these products, especially when they come packaged in very similar ways as standard, every day investments? What is the right way to determine the appropriate level of risk for an average investor, and then filter out products accordingly?
The first and most important step is to understand your own risk appetite. Ask yourself two things: When do you need this money? How much of a drop in value can you stomach? If you need it soon to buy a home, pay for schooling, or retire – avoid high risk, because you'll have less time to recover if the value of your investments drops. And if the thought of a sudden 30 per cent drop makes you lose sleep, stay away from products with that much volatility.
Once you know your risk tolerance, judge products against it. If you don't understand the risk you're taking, don't buy the product. You don't need to be an expert, but your decision should feel like a balanced, thoughtful decision – not a guess.
Finally, some red flags. If it sounds too good to be true – it probably is. If it promises a quick, win-or-lose outcome, it's gambling. If you feel like you should be adjusting your positions all the time, your money is working for someone else – not you.
Good investments should generally increase in value gradually over time. There will be pullbacks, company-specific events, and they won't always go up, but over a long enough period your overall portfolio should produce a relatively predictable return. It’s ok for your investments to be boring – if you have a lot of anxiety about your investments, or a thrill from trading, you just might be gambling, not investing. The Wolf of Wall Street made for a great movie. But I’d say it's not a great model for your retirement.
Do you think we need new regulations to respond to these new types of products? How should policymakers approach that?
New regulations are needed. Point blank. I believe the simplest and most effective approach is to amend the Criminal Code (which regulates gambling federally) to explicitly classify prediction markets on sports, entertainment and other non-financial categories as betting. This would then bring them under existing provincial gaming frameworks, which already include consumer protections like self-exclusion tools, deposit limits and addiction awareness timeouts, and ensure revenues are shared with provinces to support public priorities, including healthcare, problem gambling and addiction services.
Here's why this matters: companies resisting this classification aren't debating finance or philosophy. They may be trying to avoid paying taxes at the expense of the public. Gambling is taxed differently than financial services and that revenue is generally shared with the province (e.g. under the iGaming framework in Ontario). In fiscal 2025 for example, iGaming generated roughly $580 million in provincial revenue to support public priorities, including healthcare, education and infrastructure – with separate requirements on operators to fund problem gambling prevention and addiction awareness programs. Companies lobbying to keep prediction markets unregulated are essentially lobbying to avoid paying that tax and funding the public health services that manage the harm these products can create.
The laws need to be clearer that this conduct is gambling. Otherwise, companies will continue pressing regulators to find or create loopholes. Legislation makes that much more difficult.
When it comes to regulation, do you see things like prediction markets as fundamentally different from other high risk investment products, like highly leveraged ETFs or zero day options? Or some forms of cryptocurrency for that matter?
There are real similarities – all are high-risk products which target retail investors. But there’s a key difference in how you can lose. Leveraged ETFs are volatile, but they can retain value when the market turns. Crypto fits somewhere in between; it can swing wildly and is a complex commodity to regulate, but it isn't binary; it can recover or decline over time rather than vanish on a single outcome. On the other end of this spectrum are prediction markets, which are simply all or nothing – get it wrong and you lose the full amount.
The bigger distinction isn't risk – it's structure. ETFs and options are recognized financial products. They fit within existing securities frameworks. You can regulate them by setting standards within those product classes: enhanced disclosures, accreditation requirements for access, position limits. Think of it like warning labels on cigarettes – the products exist, but you're managing their risk through disclosure and access controls.
Prediction markets are fundamentally different. They're not financial products – they're betting platforms. Sports and entertainment markets in particular don’t serve a legitimate financial function, so they don’t belong in the securities framework. That's why legislative action makes more sense – you're classifying a new product category and bringing it under existing gaming regulations, where consumer protections, revenue-sharing, and addiction safeguards already exist.
High risk financial products are particularly popular among young people. What’s one piece of advice you personally would give a young person in your life right now who is interested in growing their money and considering high risk products?
First, separate 'high-risk investing' from 'gambling.' An equity portfolio across growth stocks is high-risk investing. A $10,000 bet on the Raptors is gambling for entertainment. A same-day expiry option on Nvidia because of earnings? Much closer to gambling than investing. Understand what each one actually is, then be honest with yourself about which category you're in.
Then, bucket your money based on its purpose. If you want to gamble on sports or options, set aside money you can afford to lose entirely and have fun with it. Know that limit and stick to it.
Separately – and this is critical – consistently put money aside for long-term investing. Put that money into investments you understand, and that aligns with your needs and risk tolerance. Build a diversified portfolio of traditional products. It should be boring, predictable and growing steadily; not lightning-fast, but reliably over decades.
Enjoy the first bucket. Protect the second. Never mix them. The moment you start thinking of your long-term investments as quick trading opportunities, you've lost the plot.
