Prediction Markets for Sports and Politics Banned in Brazil
National Monetary Council of Brazil has issued new regulations prohibiting prediction markets from offering contracts related to sports, politics, or entertainment. The updated rule, which takes effect on May 4, confines such products to those based solely on economic and financial assets.
In a move that sharpens the distinction between traditional betting and financial instruments, Brazil’s Central Bank clarified that prediction markets cannot provide contracts tied to outcomes in sports, political events, or entertainment. This regulation, set to be enforced shortly before the FIFA World Cup, aims to delineate the scope of permitted activity in the country’s financial landscape.
The regulation signifies a new dividing line between Brazil’s regulated betting industry and platforms that offer event-based contracts as financial products. It also puts pressure on operators who entered the market under the assumption of a broader regulatory environment, including US-based prediction market platform Kalshi.
Resolution No. 5,298, signed by Banco Central do Brasil president Gabriel Galípolo, establishes the legal boundaries for financial institutions operating within Brazil. According to the resolution, these entities are barred from offering derivatives linked to political, electoral, social, cultural, or entertainment events. Such contracts are now restricted exclusively to economic and financial assets.
The National Monetary Council (CMN), which is responsible for formulating monetary and credit policy in Brazil, made this move amid increasing popularity of prediction market platforms that function outside the scope of regulation. Unlike the betting sector, which Brazil regulated at the start of last year under Law No. 14.790/2023, these prediction markets have largely operated in regulatory grey areas.
Brazilian authorities have already taken action against some platforms operating in the prediction market space. Finance Minister Dario Durigan announced that the telecommunications agency Anatel has blocked 28 platforms that claimed to provide derivative financial products but also offered bets on various subjects.
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Dario Durigan stated that, “The predictions market violates the law passed by the National Congress. Therefore, the product offered by these platforms cannot be regulated.” The Minister also highlighted ongoing government concerns about rising indebtedness associated with gambling activities. The administration is exploring additional measures to tighten regulation and oversight, including a forthcoming presidential decree that aims to restrict access for financially vulnerable consumers and impose limits on gambling advertising.
