Inspired by the U.S. boom in digital derivatives, B3, Brazil’s main stock exchange, plans to launch prediction market products before the end of next month.
B3 Chairman Gilson Finkelsztain has told iGamingFuture that its first prediction market products will be options linked to the Ibovespa index itself, the U.S. dollar, and Bitcoin.
Given all the movement surrounding prediction markets in the United States–including a recent alliance between Polymarket and Major League Soccer (MLS), another between Kalshi and CNN, and the joint venture between Robinhood and Susquehanna International Group–, it’s natural for the Brazilian exchange B3 to begin a cautious move in this direction, said Finkelsztain, initially focusing on financial benchmarks such as the Selic rate, the exchange rate, and cryptocurrency.
These initial offerings will not be classic decentralized prediction markets, such as Kalshi or Polymarket, but regulated binary/options event contracts, traded on B3’s existing infrastructure.
And one big question is whether Brazil will follow the U.S. path of sports betting on prediction markets – a booming vertical, highlighted by last Sunday’s NFL Super Bowl LX, which saw a record US$500 million (£366.56m) bet on game outcomes between the New England Patriots and eventual winners, The Seattle Seahawks.
Both DraftKings and FanDuel, who dominate U.S. online sports betting, have entered the prediction markets space in recent months with launches of their own DraftKings Predictions and FanDuel Predicts, taking sports wagering and other binary digital betting into a new and exciting realm.
Regulatory Vacuum
For now, Brazilian law does not allow prediction markets to offer sports betting.
But there are also no laws that expressly forbid it.
Licensed betting operators can offer only online games or wagers on sporting events, but offering predictions on sporting events is not permitted.
“There is a regulatory vacuum: no law establishes how to treat a market for events outside the sports sector, leaving this type of activity without legal backing,” Tiago Horta Barbosa, Integrity Manager for Latin America at Genius Sports, told me.
“Consequently, a licensed betting operator cannot simply add predictions on political or economic events to its portfolio without violating its license.
“It would be necessary to create a new legal framework that allows betting houses to offer these products, or to let exchanges and financial entities (such as B3) handle it separately,” Barbosa continued.
“For example, in the future, betting operators themselves could establish partnerships with B3 or launch financial subsidiaries to offer predictive markets to their clients, provided that the CVM and the Ministry of Finance’s betting regulator SPA authorize it.
“Alternatively, Brazilian legislators could at some point broaden the definition of fixed-odds betting to include ‘real-life events’ beyond sports, creating a specific license for predictive markets.”
Reform
Udo Seckelmann, Head of Gambling & Crypto at Brazilian law firm Bichara e Motta Advogados said that the legal classification of prediction markets remains uncertain.
It is yet to be decided whether they should be treated as gambling–and thus subject to gambling laws–or as derivatives, subject to the jurisdiction of the Brazilian Securities and Exchange Commission (CVM), explained Seckelmann.
“In this context, the entry of betting operators into this [prediction] market entails relevant risks, either due to the potential characterization of gambling, which constitutes a criminal misdemeanor, or for facilitating the trading of derivatives without proper authorization, which makes it unlikely that such services would be offered by the same entity licensed by the SPA (Secretaria de Apostas e Prêmios), given the potential risk to its licence,” Seckelmann argued.
This dichotomy and potential legal conflict facing any prediction markets offering sports betting in the South American nation can only be settled by fundamental regulatory reform, he concluded.
