- Brazil banned prediction markets tied to sports, politics, culture, and entertainment contracts.
- Kalshi and Polymarket became inaccessible as officials moved to block non-compliant platforms.
- Regulators said the platforms mirror fixed-odds betting and threaten investor protection.
Brazil has imposed a ban on prediction market contracts on April 24, targeting platforms such as Kalshi and Polymarket. The move followed the National Monetary Council’s Resolution No. 5,298, which cited investor protection, market integrity, and derivatives compliance as key reasons for the crackdown.
According to the report, the measure covers contracts tied to sports, gaming, political, electoral, social, cultural, and entertainment events. The directive, however, took effect on May 4, making Brazil the third Latin American country to restrict prediction markets after Argentina and Colombia.
Officials Classify Prediction Markets as Fixed-Odds Betting
The move followed a technical note from the Secretariat of Prizes and Betting. The gambling watchdog said prediction market platforms reproduce basic elements of fixed-odds betting. Finance Minister Dario Durigan reinforced that position, saying Brazil has clear rules for fixed-odds betting operators.
He argued that platforms cannot create structures to bypass existing legislation. As reported by a local outlet, Folha de S. Paulo, Durigan stressed that about 28 platforms were banned, framing the action as part of a broader effort to protect Brazilian savings amid the rapid growth of online gambling.
As a result, the Finance Ministry is expected to treat the affected platforms as illegal gambling schemes. Authorities now plan to block their websites and applications while also coordinating with financial institutions to halt their operations.
Ban Targets Non-Financial Event Contracts
Under Resolution No. 5,298, Brazil prohibits the offering and trading of derivatives whose underlying events are not economic or financial benchmarks. The central bank said contracts linked to real sporting events, virtual gaming events, and political or cultural outcomes are barred.
Nevertheless, the measure allows derivatives tied to financial benchmarks. These include price indices, securities indices, bond indices, interest rates, exchange rates, commodities, financial assets, and listed securities.
Additionally, the resolution gives Brazil’s Securities and Exchange Commission discretion over other events. It can decide whether an event represents a valid economic or financial benchmark.
Global Scrutiny of Prediction Markets Widens
The move reflects a wider dispute over whether event-based contracts should be treated as derivatives or gambling products. Some U.S. states, including Nevada and New York, have made similar arguments.
Meanwhile, Polymarket is already blocked in more than 30 countries, according to its documentation. The restrictions include OFAC-related limits and national bans
However, the CFTC has claimed exclusive oversight over these platforms. It has also challenged state efforts to regulate or ban them.
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