On April 24, 2026, Brazil’s National Monetary Council (CMN) took a decision that reverberated well beyond the country’s borders: it moved to prohibit prediction market platforms — including Polymarket and Kalshi, two of the largest global players in the category — from operating in Brazilian territory. Within days, telecommunications authorities blocked access to at least 27 platforms nationwide.
For an international audience, this can look like an isolated crackdown on a crypto-adjacent product. It isn’t. It’s a direct extension of the same legal framework that governs Brazil’s licensed betting market — and understanding the reasoning behind it tells you a great deal about how Brazilian regulators think about the boundary between financial innovation and gambling.
That boundary matters for any operator building products anywhere near it.
What Prediction Markets Are, and Why Brazil Drew a Line
Prediction market platforms let users trade contracts tied to the outcome of future events — elections, sports results, economic indicators, and more. The price of each contract reflects the market’s collective expectation of a given outcome, which is precisely what makes these products difficult to classify: they sit at the intersection of a financial instrument and a wager, and different jurisdictions have reached different conclusions about which category they belong to.
Brazil’s answer came through CMN Resolution No. 5,298/2026, which took effect on May 4, 2026, together with a supporting Technical Note (SEI No. 2958/2026/MF) issued by the Secretariat of Prizes and Bets (SPA), the same federal body that licenses Brazil’s regulated betting operators. Together, these two instruments give a precise legal definition of what is — and isn’t — permitted.
The Legal Line Brazil Drew
Article 3 of CMN Resolution No. 5,298 prohibits the offering and trading of derivative agreements in Brazil whose underlying asset is tied to:
- A real sports-themed event, as defined under Brazil’s betting law, Law No. 14,790/2023
- A virtual event tied to an online game, under the same law
- A real or virtual event of a political, electoral, social, cultural, or entertainment nature that, in the judgment of Brazil’s securities regulator (CVM), doesn’t represent a recognized economic-financial benchmark
That third category is the operative test, and it’s worth sitting with, because it explains why some derivative products remain legal in Brazil while prediction markets do not.
The resolution explicitly defines “economic-financial benchmarks” — the admissible underlying assets for legal derivatives — as things like price and rate indexes, interest rates, exchange rates, credit risk indicators, commodity prices, and instruments traded on regulated exchanges or registered with Central Bank- or CVM-authorized infrastructure.
An election outcome or a football match result simply doesn’t fit that definition, however sophisticated the platform trading on it may be.
This distinction matters in practice: Brazil’s own stock exchange, B3, launched an “Event Agreements” product around the same period — and because those contracts are structured around genuine economic-financial benchmarks rather than sporting or political outcomes, they fall outside the prohibition entirely, subject to ongoing CVM oversight. The rule isn’t a ban on event-linked financial products in general. It’s a ban on dressing up betting as a derivative.
Why the SPA Concluded Prediction Markets Are Betting, Not Finance
The Technical Note behind the resolution makes SPA’s reasoning explicit: prediction market platforms, regardless of how they present themselves — as financial instruments, as “atypical agreements,” as anything other than betting — reproduce the essential structural elements of fixed-odds betting as defined under Law No. 14,790/2023. In the SPA’s assessment, this isn’t a new financial category requiring a new regulatory response; it’s an existing, already-regulated activity wearing different packaging.
On that basis, the SPA recommended that any prediction market offering contracts tied to real-world sporting, political, social, or cultural events be treated as unlawfully operating a fixed-odds betting lottery — and recommended blocking Brazilian user access under Article 17 of Law No. 14,790/2023, the same enforcement mechanism used against unlicensed sportsbooks.
There’s a second layer worth understanding for anyone building products that touch Brazilian politics: the Technical Note flags a specific overlap with electoral law. Under TSE Resolution No. 23,735/2024 (as amended by Resolution No. 23,744/2024), using any platform — digital or otherwise — to offer bets, prizes, or benefits tied to a candidacy or election outcome can constitute an electoral offense, potentially amounting to abuse of economic power or illegal vote solicitation.
With Brazil’s general election scheduled for October 2026, this electoral dimension almost certainly accelerated the timeline for the broader prediction market decision.
The line between a compliant derivative product and an unlicensed betting product in Brazil is precise, but it isn’t always intuitive from outside the country. Talk to Control F5’s consultancy team before launching any product that sits near that boundary.
What Happened Next: 27 Platforms Blocked
Following the CMN resolution, the federal government announced that at least 27 prediction market platforms, including Polymarket and Kalshi, had been blocked on the grounds that they were operating unlawfully under Brazil’s existing betting legislation.
Enforcement moved through Brazil’s telecommunications regulator, which has the same website-blocking authority used against unlicensed sportsbook operators — reinforcing SPA’s underlying position: this wasn’t a new enforcement regime, it was the existing one, applied to a product that had been operating in a gray area.
Kalshi, which had been reported to be exploring Brazil as a potential first international market and is co-founded by a Brazilian national, said at the time that it was reviewing the resolution. Polymarket did not issue an immediate public response.
Why This Matters Beyond Prediction Markets
For international operators, the Polymarket and Kalshi decision is a useful case study in how Brazilian regulators approach a broader question: what counts as betting, regardless of what it’s called?
The SPA’s reasoning — look past the labeling to the underlying mechanics of the product — is a lens that applies well beyond prediction markets, and it’s consistent with the same regulatory posture visible in Brazil’s ongoing legislative debate over the Bets Law itself and in the advertising rules that now govern the entire promotional chain around betting.
The lobbying dynamic behind this decision is also instructive. Brazil’s licensed betting industry — represented by trade bodies including IBJR and ANJL — had pushed regulators to act against prediction markets months before the CMN resolution, arguing these platforms offered unlicensed betting in direct competition with an industry that had only just been formally regulated.
That’s a pattern worth understanding on its own terms: Brazil’s regulated operators have a direct interest in seeing the perimeter of “betting” defined broadly and enforced consistently, and they have shown they’re willing to advocate for that outcome.
Any product positioned adjacent to betting — prediction markets, fantasy sports platforms, skill-based games with a wagering component — should expect the same scrutiny, and potentially the same industry pushback, if it gains meaningful traction with Brazilian users.
What’s Still Unresolved
CMN Resolution No. 5,298 tasks the CVM with issuing supplementary regulation and with the ongoing determination of what qualifies as a legitimate economic-financial benchmark for derivatives purposes — meaning the precise boundary of what’s permitted is still being actively shaped, not fully settled. B3’s
Event Agreements product offers one template for how a genuinely finance-oriented event contract can operate within the rules, but the CVM’s case-by-case assessment role means new products in this space should expect regulatory review rather than a fixed rulebook.
Key Takeaways for International Operators
- Brazil’s prediction market ban isn’t a standalone rule — it’s an application of the same fixed-odds betting framework (Law No. 14,790/2023) that governs licensed sportsbooks.
- The legal test is whether a derivative’s underlying asset is a genuine economic-financial benchmark; sporting, political, and entertainment outcomes fail that test regardless of how the product is structured or marketed.
- Election-related prediction markets carry an additional layer of electoral law risk under TSE regulations — relevant with Brazil’s October 2026 general election approaching.
- Enforcement used the same website-blocking mechanism applied to unlicensed betting operators, reinforcing that this was existing law applied to a new product category, not a new regulatory regime.
- Brazil’s licensed betting industry actively advocated for this enforcement action, a dynamic likely to repeat for any future product that competes at the edge of the regulated betting perimeter.
Distinguishing between what’s a compliant financial product and what Brazilian regulators will treat as unlicensed betting requires more than reading the resolution — it requires understanding how SPA and CVM have applied that reasoning in practice, and where the remaining gray areas sit.
Contact Control F5 if you’re evaluating a product in Brazil that touches this boundary.
