Brazil moves in against prediction markets

Brazil has heard the whole prediction markets are not gambling argument, and the country’s regulator appears not to be buying it. Even though Kalshi has been keen to launch in the country of its co-founder, the platform may be given nothing but the cold shoulder in the near term.

Just days ago, Brazil blocked prediction market platforms and tightened derivative rules. The goal is to restrict what the Finance Minister Dario Durigan has described as bet-like products. Anatel, the telecoms watchdog, has already moved against 28 platforms last week, and shut down their operations, although at the minister’s behest, the list was later changed to 27 platforms instead. Both Kalshi and Polymarket remained on the list and had to shut down by early Friday afternoon. The National Monetary Council (NMC) has already issued guidance on what assets can be used in derivatives trading, ruling out anything that ties to sports events, online gaming, politics, election days, culture, or social outcomes. This measure effectively puts a stoppage on what prediction market platforms can offer to begin with, and certainly eats into their main source of revenue. Only pre-defined economic and financial benchmarks - to name price indices, interest, and exchange rates may be traded on, NMC specified.

Brazilian authorities have taken a less welcoming stance on prediction markets compared to the United States. The Commodity Futures Trading Commission (CFTC) in the US has launched a lawsuit against individual states that the watchdog alleges have overstepped their jurisdiction by trying to preempt federal law, replacing it with local statutes. Economic reforms secretary Regis Dudena also went on to clarify that only real sports events and online games can be gambled on, and that requires a specific license. Brazil has also recently seen its president toy with the idea of reversing the legalization of gambling in the country. In the meantime, there has been no shortage of prediction market critics, with Vanguard CEO recently describing them as financial exploitation.