Brazil Blocks Prediction Market Platforms, Including Kalshi and Polymarket

In yet another blow to the sector, the Brazilian Federal Government announced a total ban on prediction market platforms, prohibiting any activity in the field across the country. This decision was communicated during a press conference held at the Palácio do Planalto.

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According to Finance Minister Darío Durigan, ANATEL is actively implementing measures to block access to 27 websites related to prediction platforms. The platforms are accused of violating Law 14.790/2023 which regulates fixed-odds betting.

According to Durigan, one of the objectives of the government is to protect consumers who may spend money on these betting sites. “It is necessary for us not to allow people to squander their savings on these sites“, he emphasized.

Prediction Markets Are Considered Illegal Gambling

Brazilian regulators explicitly state that prediction platforms are considered illegal betting organizations. Even though these platforms position themselves as a way to engage in analysis, the ability of users to invest in prediction events to earn money is viewed by regulators as gambling.

During the press conference, Daniele Correa Cardoso, Secretary of Prizes and Betting at the Ministry of Finance (SPA/MF), shared information regarding ongoing efforts. The official explained that over 39,000 illegal websites currently operating in Brazil have already been blocked by government agencies.

As of now, the Brazilian government does not plan to develop a special regulatory framework to regulate prediction market platforms.

Restriction of Derivative Contracts Announced by CMN

The news also came together with a new CMN decision, which further tightens restrictions on the operation of derivative contracts. According to the upcoming resolution, starting from May 4, it will become prohibited to operate derivative contracts linked to non-financial events.

To put it simply, trading of contracts based on the results of sports events, games of chance, political or electoral campaigns, or cultural or entertainment events will be considered illegal.

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Impact on Development Plans of a Fast-Growing Segment

With its latest decision, the Brazilian government makes it difficult for prediction market platforms to operate and expand their activities in Brazil. Most of these companies generate profit from transactions that are conducted using the platforms.

Recently, prediction market platforms have experienced tremendous growth in popularity both inside and outside the United States. Platforms like Kalshi and Polymarket are now popular all over the world.

Nevertheless, regulatory bodies in multiple countries have started taking actions. For instance, Argentina recently blocked the operations of Polymarket.

Industry Innovations and Uncertain Future of a Promising Sector

Just before the ban, the first association in the field, ABPred, was launched to structure the industry in Brazil. At the same time, PreviLabel, a major white-label provider for prediction platforms entered the Brazilian market.

However, with the latest decision of the Brazilian authorities, the development of this segment in Brazil may come to a complete stop due to the prohibition of the operation of derivative contracts and the classification of prediction markets as illegal betting.

Clearly, the Brazilian government believes that it should implement a regulatory framework that would help prevent gambling-related financial problems. In this regard, both finance and betting authorities have decided to tighten restrictions on financial instruments.

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Source: SBC Noticias