This measure, which would affect international forecast markets, such as Polymarket and Kalshi in Brazil, is part of the fight against illegal gaming carried out by the administration of President Lula. According to a technical note, these platforms would reproduce fixed quota bets, already regulated.
Key points to remember:
- Brazil’s National Monetary Board banned non-financial forecasting markets on April 24 via Resolution 5,298.
- Brazil is the third Latin American country to ban these platforms, with the Finance Ministry targeting illegal gambling.
- On May 4, the Finance Ministry could block these sites, as it has done with other illegal gambling operations.
National Monetary Board issues blanket ban on betting on non-financial forecast markets
Brazil’s National Monetary Council issued a resolution broadly banning predictive market contracts tied to non-financial underlying events.
Resolution No. Law No. 5,298, published on April 24, established that derivative contracts related to real sporting events, virtual online gaming events or real or virtual events of a political, electoral, social, cultural or entertainment nature are prohibited in the country.
Likewise, the resolution establishes that derivatives linked to economic and financial references, including price or rate indices, securities indices, bond indices, interest rates and exchange rates; Or raw material prices, Financial assets and securities traded on organized and over-the-counter markets will be authorized.
This measure follows a technical note from the Secretariat of Prices and Betting (SPA), Brazil’s gambling watchdog, estimating that market prediction platforms “simply replicate the essential elements of fixed quota betting.”
Dario Durigan, Brazil’s Finance Minister, stressed that existing regulations were in place for betting platforms. He declared:
“Brazil has established clear rules for the operation of fixed odds betting, and there will be no room for those who attempt to operate outside of this system or create structures to circumvent the legislation”
The Ministry of Finance will treat these platforms as illegal gambling schemes, block websites and applications, and coordinate with other financial institutions to terminate their operations.
The regulation, which will come into force on May 4, makes Brazil the third Latin American country to ban market forecasting platforms to some extent, after Argentina and Colombia.
Brazil’s approach is similar to that advanced by some states, including Nevada and New York, arguing that in certain circumstances prediction markets fall under the classification of gaming and betting operations. However, the Commodity Futures Trading Commission (CFTC) also claims to have exclusive oversight over these platforms and has decided to challenge states that aim to regulate or ban them.
