Kalshi and Polymarket are among 27 prediction market platforms that the Brazilian government has taken action to shut down. According to state-owned news source Agência Brasil, the decision was made on Friday and is a result of a direction from the Ministry of Finance, which was enforced by the National Telecommunications Agency (Anatel). According to the authorities, these services are operating unlawfully as they do not comply with Brazil’s present legal framework.
Finance Ministry executive secretary Dario Durigan reportedly said:
“We have been monitoring the evolution of this sector in Brazil, which suffered a period of anarchy because there were no rules, no oversight, from 2018 to 2022.”
Potential to Put Consumers at Risk
This action is in response to Resolution 5.298, which was released on Friday by the Brazilian National Monetary Council (CMN). This resolution severely restricts the services that prediction market platforms are able to provide, and it will take effect in early May. Authorities see contracts related to politics, entertainment, sports, or social events as more akin to gambling than financial investments, therefore prohibiting them under the new regulations.
Financial market regulators will continue to oversee only contracts tied to economic variables like inflation, interest rates, currency rates, or commodity prices. Durigan said that prediction markets have the potential to put consumers at risk of financial damage and increase family debt.
Durigan added:
“At a time when we are working to reduce debt levels among families, small businesses, and students, we must also prevent new forms of harmful indebtedness.”
Kalshi, Polymarket, PredictIt, Robinhood (via its forecasting feature), and Fanatics Markets are among the prohibited platforms. The platforms contain a mix of foreign and Brazil-focused services.
Along with various Brazil-focused services including Palpita, Cravei, Previsao, and MercadoPred, other platforms that have been impacted include ProphetX, Hedgehog Markets, Novig, Polyswipe, PRED Exchange, and Stride.