Brazil targets prediction markets with Kalshi and Polymarket in sight

Brazil tightens its control over prediction markets related to crypto and financial betting. Authorities have initiated the blocking of 27 platforms, including Kalshi and Polymarket. This measure comes after a directive from the Ministry of Finance and an action by the National Telecommunications Agency. According to authorities, these services do not comply with the current legal framework. The case therefore goes beyond just the crypto issue. It also affects gambling, user protection, and financial stability.

Brazil tightens its legal framework on prediction markets

Brazilian authorities have launched the closure of 27 prediction market platforms, including Kalshi and Polymarket. Announced on Friday, this decision follows a directive from the Ministry of Finance and an enforcement measure from the National Telecommunications Agency, Anatel, according to Agência Brasil.

Authorities believe these services do not fall under the current Brazilian legal framework. They therefore consider them illegal. This measure marks a toughening against prediction market platforms operating without authorization in the country.

Dario Durigan, the Brazilian minister of finance, justified this decision by the lack of rules that long surrounded this sector in Brazil. He stated during a press conference at the Presidential Palace:

We have closely monitored the evolution of this sector in Brazil, which experienced a period of anarchy due to the absence of rules and control, from 2018 to 2022. 

Dario Durigan, Brazilian Minister of Finance

This decision comes after the publication of the 5,298 resolution of the National Monetary Council on Friday. The text, expected early May, prohibits contracts related to sports, politics, entertainment, or social events. However, contracts related to economic indicators will remain authorized under financial supervision.

Prediction markets and household debt 

Furthermore, Dario Durigan believes that prediction markets can increase household debt and expose users to high financial risks. According to him, this supervision is part of a broader strategy to reduce debts among families, small businesses, and students.

While we strive to reduce household, small business, and student debt, we must also prevent the emergence of new forms of harmful debt.

Dario Durigan, Brazilian Minister of Finance

The blocked platforms include international services and actors focused on Brazil. The list notably includes Kalshi, Polymarket, PredictIt, Robinhood through its forecasting feature, and Fanatics Markets. Other platforms are also concerned, such as ProphetX, Hedgehog Markets, Novig, Polyswipe, PRED Exchange, and Stride. Local services, including Palpita, Cravei, Previsao, and MercadoPred, are also among the targeted platforms.

International legal framework: Brazil follows a broader trend

Brazil is part of an international trend of controlling prediction markets. In Europe, France, Belgium, and the Netherlands have already blocked or sanctioned platforms operating without authorization. These services are often likened to gambling or unauthorized financial products.

In the United States, the framework remains more fragmented. Federal regulators and states do not always adopt the same reading, which maintains tensions around platforms like Kalshi or Polymarket. In this context, Brazil adopts a more direct approach: blocking access deemed illegal and only authorizing contracts related to economic indicators.

This line could inspire other emerging markets facing the same challenges of innovation, consumer protection, and financial stability. In the short term, platforms will have to prove their compliance with the Brazilian crypto market, while unregulated actors risk leaving the country.