Prediction market platform Kalshi has begun efforts to overturn Brazil’s decision to prohibit certain prediction market products, arguing that regulation offers greater consumer protection and transparency than outright bans.
Speaking to Bloomberg Línea during Web Summit Rio 2026, Kalshi co-founder Luana Lopes Lara said the company intends to engage with Brazilian authorities following recent measures that effectively blocked prediction market platforms from offering non-financial event contracts to local users.
According to Lara, prohibition creates unintended consequences for regulators and consumers alike.
“Prohibition is the worst of worlds for a government: you lose tax revenue, you have no consumer protection and you lose the trail of the money. It is better to work with companies so they grow inside the country.”
Kalshi Distances Itself From Traditional Sports Betting
Lara also challenged comparisons between prediction market platforms and conventional sportsbooks, emphasizing what she described as a fundamental difference in business models.
“Kalshi does not make money when people lose — that is a very big difference.”
The company has consistently positioned itself as an exchange that facilitates trading on event outcomes rather than a traditional betting operator that profits directly from customer losses.
That distinction remains central to ongoing regulatory debates in multiple jurisdictions, where authorities continue to examine whether prediction markets should be classified as financial products, derivatives, or gambling services.
Brazil Began Reviewing Prediction Markets Earlier This Year
Regulatory scrutiny of prediction markets in Brazil intensified in March when the Secretariat of Prizes and Betting (SPA), part of the Ministry of Finance, issued a public statement confirming that it was monitoring the sector and conducting technical studies.
At the time, the regulator noted that no prediction market operators were authorized to offer such products in Brazil.
The statement signaled growing government attention toward platforms that allow users to trade contracts linked to future events, including sports results, elections, entertainment outcomes, and economic developments.
New Resolution Blocks Non-Financial Event Contracts
The regulatory landscape shifted significantly in April when Brazil’s National Monetary Council (CMN) approved Resolution 5,298.
The measure, which came into force on May 4, 2026, prohibits contracts tied to non-financial events, including:
- Sports results
- Elections and political outcomes
- Reality television shows
- Entertainment events
- Social and cultural events
According to Brazilian authorities, these contracts function more like games of chance than investment products and therefore fall outside the scope of activities permitted within the country’s financial markets framework.
Regulators Seek to Close Perceived Legal Gap
The CMN said the resolution was designed to close a regulatory gap that had allowed prediction market platforms to operate in a space not explicitly covered by existing betting or financial regulations.
Officials argued that non-financial event contracts were competing with licensed sports betting operators without being subject to the same regulatory obligations.
Brazilian media reports identified Kalshi and Polymarket among the platforms most directly affected by the measure.
The rule applies not only to domestic operators but also to foreign platforms offering these products to Brazilian residents.
Securities Regulator Receives Oversight Powers
Alongside the new restrictions, Brazil’s Securities and Exchange Commission (CVM) received complementary regulatory and supervisory authority related to compliance and enforcement.
The regulator is expected to play a central role in monitoring whether platforms continue offering prohibited contracts to users located in Brazil.
The expanded oversight framework reflects Brazil’s broader efforts to establish clearer boundaries between regulated betting activities, financial products, and emerging prediction market services.
Future of Prediction Markets in Brazil Remains Uncertain
Kalshi’s decision to engage with Brazilian authorities suggests the company sees room for further discussions despite the recent regulatory setback.
The platform continues to advocate for a framework that would allow prediction markets to operate under supervision rather than prohibition, arguing that regulated participation offers stronger consumer safeguards and greater transparency.
For now, however, Resolution 5,298 remains in force, creating significant obstacles for prediction market operators seeking access to one of Latin America’s largest digital betting and financial technology markets.
As regulators worldwide continue debating how prediction markets should be classified and supervised, Brazil has emerged as one of the first major jurisdictions to draw a clear distinction between financial event contracts and markets tied to sports, politics, and entertainment outcomes.
