Brazil issues public warning on prediction markets illegal status

Brazil’s PT government has launched a new campaign which has warned the public that “betting will never be an investment or income”. 

The message follows the recent ban on prediction markets across Brazil, with the government emphasising that the platforms are not a financial instrument.

The campaign began on Friday via the government’s official account on X, where authorities adopted the blunt slogan of “enough on gambling addiction”. The advert deems prediction markets as illegal betting platforms/services which are directly linked to indebtedness and social harm.

The warning underscores a decisive regulatory judgement on the status of prediction markets in Brazil, following an intervention by the National Monetary Council (CMN), which determined that prediction markets, regardless of branding, replicate the mechanics of fixed-odds betting. 

The agency, which oversees Brazil’s financial markets and monetary policy, has determined that derivatives cannot be tied to sporting, political, or entertainment events. That classification now underpins a coordinated crackdown, combining financial restrictions, telecom enforcement and political signalling into a unified policy direction.

No status for Prediction Markets

The flashpoint for the decision follows Kalshi’s attempted launch across Brazil. As reported by SBC Noticias, the US operator had identified Brazil as its first international market, seeking to leverage its regulated US status to enter Brazil as a financial service – blocked by CMN.

Yet regulators in Brasília deemed that Kalshi’s model exposed a structural gap – one that risked allowing betting products to operate under the guise of financial derivatives.

That gap has now been closed. Banco Brasil formalised the prohibition through Resolution No. 5,298, banning derivatives linked to non-financial events such as sports, elections and entertainment outcomes. 

Financial contracts are now restricted strictly to recognised economic indicators, removing any legal pathway for prediction-style products within Brazil’s financial system.

Enforcement has also shifted to access to the platforms. The National Telecommunications Agency (ANATEL) has been tasked with blocking both domestic and international platforms, ensuring prediction markets cannot reach Brazilian consumers via digital channels. 

The dual approach – cutting off both financial rails and user access – signals that regulators are intent on eliminating the vertical entirely, rather than adapting or licensing it.

Government officials have justified the move on multiple fronts. At a regulatory level, prediction markets are seen as circumventing the Bets framework, creating an unlicensed parallel market.

Socially, the government has linked the platforms to concerns over household debt, with policymakers increasingly citing gambling as a driver of financial fragility. Politically, the government has drawn a clear line, stating that it will not allow “life and politics to be shaped by gambling”, particularly where event-based speculation intersects with elections or public affairs.

The crackdown also reflects Brazil’s broader approach to market formation. Rather than allowing innovation to test regulatory boundaries, authorities are opting for pre-emptive control – defining acceptable products before they scale. As such, prediction cannot be viewed as a new asset class.

Lula to show the way

On the wider gambling front, the intervention forms part of a tightening policy cycle led by President Luiz Inácio Lula da Silva.

As part of his 2026 campaign manifesto, Lula has pledged to introduce a presidential decree on sweeping online gambling reforms, signalling further restrictions ahead. Among the measures under consideration is a ban on individuals receiving government assistance from accessing betting platforms, framed as an effort to “remove gambling from debt” and protect vulnerable consumers.

The broader agenda suggests that Brazil’s gambling framework remains in flux, despite the launch of the Bets regime back on 1 January 2025. While the market has attracted operator interest and generated strong tax returns, it has also intensified political scrutiny of its social impact.

Brazil will permit regulated betting only within tightly defined parameters. Products that blur the line between finance and gambling will face immediate resistance.

For Kalshi and its peers, the outcome is decisive. Brazil will not serve as a gate keeper market to South American jurisdictions.