The Secretariat of Prizes and Bets (SPA) is continuing to monitor prediction markets in Brazil after Kalshi announced its entry earlier this week.
On Monday, Kalshi announced a deal with Brazilian brokerage firm XP International that would make Brazil the first non-US market in which the population would have access to its prediction market offering.
It was also the first predictions markets operator to go live in Brazil. In the hours following, the SPA issued a statement saying it was “continuously and technically” monitoring the situation, both in Brazil and across the globe.
Brazil is yet to put in place a formal regulatory framework governing prediction markets, although the SPA is in communication with fixed-odds betting operators on the issue.
“The prediction market is part of the Secretariat’s internal analysis agenda, with preliminary studies under way,” the SPA statement read. “It should be noted that, at present, there are no Brazilian companies formally authorised by the SPA to operate in this segment.
“The Secretariat has received a technical note from companies in the sector presenting assessments of so-called predictive markets and is addressing the issue with caution, institutional responsibility and a focus on preventing regulatory gaps, seeking to ensure consistency with the current legal framework.”
The SPA added that regulatory assessment on prediction markets would be dependent on the conclusion of technical analyses and would be conducted with bodies such as the Brazilian Securities and Exchange Commission (CVM).
It remains to be seen whether prediction markets will fall under the CVM or the Ministry of Finance’s SPA.
In the US, prediction markets operate under the regulatory authority of the federal Commodity Futures Trading Commission.
Prediction markets a potential threat to the Brazil betting sector
Fixed-odds betting operators have contacted the SPA flagging their concerns over the entrance of predictions markets such as Kalshi.
Kalshi’s move comes at a tumultuous time for the fixed-odds betting sector, which launched on 1 January 2025.
Since then, the licensed sector has faced several attempts to increase its tax burden. While most failed, a gradual tax rise that will see the gambling tax rate increase to 15% from 2028 onwards was approved.
Kalshi’s launch also followed a shock outburst from Brazil President Luiz Inácio Lula da Silva over the weekend in which he called upon the government to unite to ban online betting.
“Gambling dens are prohibited in Brazil,” Lula said in a speech for International Women’s Day. “It makes no sense to allow gambling to enter homes, indebting families through cell phones.
“Let’s work together, uniting the government, Congress and the judiciary, so that these digital casinos don’t continue to indebt families and destroy homes.”
Andre Santa Ritta, partner at local law firm Pinheiro Neto Advogados, told iGB at ICE Barcelona predictions markets could prove to be another “turbulent” aspect for the Brazilian betting sector.
Santa Ritta said: “In Brazil, you have this regulatory grey zone in which we don’t know yet where to place the predictions market industry, because it’s not iGaming and it’s not within this framework of the fixed-odds betting industry.
“We do not have regulations saying it is a type of derivative, which is how they regulate it in the US, so in Brazil the predictions market is still in a grey zone, which means you have a lot of opportunities for people willing to take the risks, and at the same time taking consumers out of the regulated iGaming industry. It’s another challenge.”
Original article: https://igamingbusiness.com/prediction-markets/spa-flags-concerns-predictions-market-kalshi-brazil/
