Brazil’s gambling regulator has issued a pointed statement following Kalshi’s entry into the country’s prediction markets this week, signalling that the US operator has moved ahead of any formal regulatory framework. The Secretariat of Prizes and Bets (SPA) confirmed it is monitoring the development closely, both domestically and internationally, as licensed fixed-odds betting operators raise concerns over a potential regulatory blind spot.

Kalshi Moves First in Brazil

On Monday, Kalshi announced a partnership with Brazilian brokerage firm XP International, making Brazil the first market outside the United States where its prediction market platform will be available to the public. The move positions Kalshi as the first operator of its kind to launch in Brazil. It’s entering a market still working through the complexities of its newly regulated fixed-odds betting sector.

Within hours of the announcement, the SPA released a statement clarifying its position. The regulator noted that prediction markets are part of its internal analysis agenda, with preliminary studies already underway. No Brazilian companies are currently authorised to operate in this segment, though. The SPA has received technical assessments from industry operators and is approaching the matter with what it describes as “caution, institutional responsibility and a focus on preventing regulatory gaps.”

Regulatory Uncertainty and Competing Jurisdictions

The challenge facing Brazil is definitional as much as regulatory. Prediction markets occupy a grey zone. They don’t fit neatly within fixed-odds betting frameworks, nor do they fall clearly under securities regulation. The SPA has indicated that any regulatory assessment will depend on further technical analysis and coordination with bodies such as the Brazilian Securities and Exchange Commission (CVM). The question of whether prediction markets should sit with the CVM or remain under the Ministry of Finance’s SPA remains unresolved.

In the United States, prediction markets operate under the oversight of the federal Commodity Futures Trading Commission, which classifies them as a type of derivative. Brazil has yet to establish a comparable structure, leaving operators like Kalshi to navigate an undefined space. Andre Santa Ritta, a partner at local law firm Pinheiro Neto Advogados, described the situation as another potentially turbulent chapter for Brazil’s betting sector. Speaking at ICE Barcelona, he noted that the absence of clear regulation creates opportunities for risk-tolerant operators. At the same time, it pulls consumers away from the newly licensed iGaming industry.

Fixed-Odds Operators Voice Concerns

Licensed fixed-odds betting operators have already contacted the SPA to flag concerns over Kalshi’s entry. The timing is particularly sensitive. Brazil’s regulated fixed-odds betting market launched on 1 January 2025, and the sector has since faced multiple legislative attempts to increase its tax burden. While most proposals failed, a gradual tax rise that will see rates climb to 15% from 2028 onwards was approved. The arrival of an unregulated prediction market offering adds another layer of competitive pressure at a moment when licensed operators are navigating a challenging fiscal environment.

The broader political context is equally turbulent. Over the weekend, Brazilian President Luiz Inácio Lula da Silva issued a sharp call for the government to unite in banning online betting altogether. In a speech marking International Women’s Day, Lula argued that allowing gambling into homes via mobile phones was indebting families and destroying households. The remarks underscore the fragile political ground on which Brazil’s nascent regulated betting market stands. The arrival of prediction markets only complicates the picture.

A Market in Flux

Kalshi’s Brazilian launch represents a calculated move into regulatory ambiguity. For the SPA, it presents a test of how quickly and effectively Brazil can adapt its frameworks to emerging market structures. For licensed operators, it raises questions about competitive fairness and the risk of regulatory gaps undermining a sector still finding its feet. The coming months will reveal whether Brazil opts to bring prediction markets into the fold or treat them as a distinct category requiring separate oversight. Either way, the debate has begun. The stakes are commercial as much as regulatory.

What the team thinks

Carl Mitchell says:

Philippa’s spot on about the regulatory grey area, but from a player protection standpoint, Brazil’s SPA would be wise to study how prediction markets have operated in the UK where we’ve seen similar products blur the lines between betting and financial speculation. The licensed operators raising concerns have a point about competitive fairness, though I’d argue the real issue is getting a robust framework in place quickly rather than trying to shut down innovation. If Brazil wants to build a sustainable regulated market like we’ve managed here, they need clear rules that cover all forms of event based wagering, not just traditional sports betting.