Kalshi’s entry into Brazil has sparked backlash from the country’s online betting industry, with operators urging regulators to crack down on prediction market platforms they say are skirting gambling rules.
The rollout–Kalshi’s first expansion outside the United States–marks the first prediction market launch in Brazil and raises questions over whether such products should be regulated as financial instruments or gambling.
The move has drawn fire from the betting sector, which is pressing the government to regulate foreign platforms such as Kalshi and rival Polymarket – or block them.
Sports betting operators claim that the prediction sites offer products similar to fixed-odds bets, while avoiding taxes, licensing fees and anti-money-laundering requirements imposed on licensed betting companies since last year in Brazil’s booming iGaming market.
Platforms like Polymarket and Kalshi let users trade contracts tied to future events – paying out if a specific outcome occurs, whether an election, an economic indicator or a sporting result.
Regulatory Scrutiny
Brazil’s Prizes and Betting Secretariat (SPA) says it is examining the issue alongside the country’s Securities and Exchange Commission (CVM), as officials weigh whether prediction markets should be treated as financial instruments or gambling products – particularly when contracts are tied to sports.
“When the underlying event is a sports outcome, the mechanics are essentially identical to fixed-odds betting: participants are staking money on the result of an uncertain event that has no economic underlying asset and no hedging function,” said Andrú Gelfi, Betsson’s Managing Partner for Brazil and director of the Instituto Brasileiro de Jogo Responsável (IBJR), a lobby for the largest betting companies operating in the country (pictured left).
“Calling that a ‘derivative’ doesn’t change the nature of the activity. It simply creates a form-vs-substance issue and opens the door to regulatory arbitrage – where betting-like activity can operate outside the betting regulatory framework,” he added.
His institute’s position is that similar economic activity should be subject to comparable regulatory standards, particularly around integrity, AML and consumer protection.
Kalshi Live
Amid debate over how prediction markets should be regulated, and in the current legal vacuum, Kalshi launched its Brazilian offering in partnership with XP International, a unit of brokerage firm XP Inc., Brazil’s largest by client base.
Under the agreement, announced Monday, clients of XP’s Clear Corretora brand who maintain an international investment account can access Kalshi’s platform and trade contracts linked to real-world events.
The initial product offering will cover only contracts tied to financial and economic developments.
In the United States, Kalshi’s markets also extend to contracts based on outcomes in sports, politics and entertainment – a category that falls squarely within Brazil’s gambling regulatory framework.
The timing is notable.
Brazil’s stock exchange B3 received approval from the CVM in February to become the country’s first domestic prediction market operator and is expected to launch products by the end of March.
In response to Kalshi’s launch, the SPA issued a press release, confirming “it has not formally authorised Brazilian companies to operate in the segment” and that “technical analyses” were ongoing.
Disguise
For Brazil’s betting industry, the conclusion is simple: prediction products are bets disguised as financial derivatives.
The online betting sector, represented by IBJR, has already written a technical note to the SPA, attempting to influence policy on the issue.
The note outlined what the ANJL sees as regulatory contradictions, competitive distortions and potential tax revenue losses if prediction markets are allowed to expand unchecked.
The document also points to the regulatory overlap between financial markets and gambling in the United States -warning Brazilian authorities that failing to clarify the rules could allow betting-style markets to expand outside the country’s gambling regime.
As the future of Brazil’s event-trading ecosystem is decided, Kalshi has positioned itself as the first major prediction market and gained a first-mover edge.
