Speaking a few days after one of the world’s largest prediction platform launches including Kalshi and Polymarket, the Ministry of Finances Secretariat of Prizes and Bets (SPA), Brazil’s local regulatory authority for betting, revealed their stance on prediction markets.
According to the local press, operators offering regulated betting highly oppose the existence of prediction platforms in Brazil.
As reported by Folha de Sao Paulo, licensed betting companies in Sao Paulo state have filed a complaint with the government seeking to have the operations of Kalshi and Polymarket suspended.
Then what is the regulatory situation of predictions in Brazil? SPA states that at the moment, no one has been officially authorized to operate prediction markets. However, this does not immediately mean that prediction platforms are illegal. In fact, prediction markets in most jurisdictions are considered a grey area: in absence of any official regulation, they are not completely legal but at the same time, they are not prohibited. The condition of Brazil’s betting market before SPA set up the regulated framework in the country on 1 January last year is quite similar.
The SPA said:
The Ministry of Finance’s Prize and Betting Secretariat monitors the issue continuously and technically, including in the international arena. The prediction market is part of the Secretariat’s internal analysis agenda, with preliminary studies underway. It should be noted that, at the moment, there are no Brazilian companies formally authorized by the SPA to operate in this segment.
Kalshi’s entry into the Brazilian market was made possible through a partnership with XP International. The subsidiary of XP Inc. is responsible for routing customers to international investment accounts, while XP’s brokerage Clear will host the Kalshi platform locally. This is a major milestone for Kalshi, not only through its first partnership with a foreign financial institution but also by becoming a player in one of the largest betting markets in the world. Though the company however believes that its product is not betting in the traditional sense.
Financial services can include prediction markets that may cover a variety of topics including politics, current affairs sports etc. However, despite the fact that sports betting markets are permitted in certain jurisdictions and that their value has been recognized, these particular markets have in fact been regularly subjected to criticism for their similarity to gambling and over time the concept has been equated to the traditional betting exchanges. Flutter Entertainment, for instance, had been contemplating entering the prediction market sector due to its involvement in running a betting exchange. Eventually, the company rolled out FanDuel Predicts in the US last December.
Kalshi is not the first prediction platform in Brazil. The local financial institution B3 has already launched its own, and for a while, Polymarket has been operating in Brazil’s gray economy. However, due to industry pushback and unclear regulation, it is unlikely that Kalshi will be the only platform trying to enter the market.
International operators such as Flutter might wait to see how FanDuel Predicts performs in the US before deciding on further expansion. The government’s stance also matters. Apart from introducing the Bets regime last year, President Lula da Silva has also increased the level of sector monitoring.
The tax on gross gaming revenue (GGR) is expected to rise from 12% to 18% by 2027, and online casinos might be banned. Should the government adopt a stricter position on prediction markets, Kalshi’s launch could very well meet with serious challenges shortly after it commenced.
