Brazil’s National Monetary Council (CMN) defined on Friday (27) the scope of derivatives in Brazil’s prediction market, curbing companies that were positioning themselves to mediate contracts outside the financial realm.
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Simultaneously, it imposed limits on potential ambitions of financial institutions to engage in contracts related to sports events or those of a political, electoral, social, cultural, or entertainment nature, which, at the discretion of Brazil’s Securities and Exchange Commission (CVM), do not represent economic-financial benchmarks.
The government is sending a message that it doesn’t want companies operating outside the regulated market: either they comply with the betting legislation or are authorized financial institutions allowed to trade derivatives.
The Brazilian Institute of Responsible Gaming (IBJR) viewed the resolution that sets limits for the organization and functioning of the derivatives market in the country as positive. “By preventing sports events, online games, and political or cultural themes from being used as collateral for financial products, the CMN consolidates legal security and prevents the financial system from being used to circumvent the regulation of the betting sector.”
Meanwhile, the Ministry of Finance’s Secretariat of Sports Betting banned 27 platforms from operating in the Brazilian prediction market, including Kalshi and Polymarket. The newly created Brazilian Association of Prediction Markets (ABPred) did not comment.
According to Paulo Brancher, a partner at Mattos Filho, the initiative did not remove non-financial companies from the game. In is view, it merely restricted the type of contracts offered in predictive markets to derivatives of an economic-financial nature.
He notes that the betting model authorized by Law 14790 does not include derivatives because the relationship between bettors is with the operator and not between parties, as in prediction markets. Moreover, the regulation of bets already has limitations regarding themes.
Caio Loureiro, a partner in Gaming & E-sports at TozziniFreire, says the resolution is limited to stating what can be considered a derivative. It does so by indicating what is not, signaling that “the council does not view prediction markets as a type of derivative.”
For him, the CMN clarifies a doubt that permeates the sector worldwide. In some cases, regulators equate predictives to derivatives, providing regulatory support. In others, like in Brazil, “the concept of derivatives does not support the prediction market.”
The resolution, he says, is emphatic in excluding from the concept of derivatives the main objects of predictives: sports, political, cultural, and entertainment events. But it does not state whether prediction markets are legal or not.
Another point is the prohibition of offering foreign derivatives that do not fit the resolution’s definition, which directly impacts the offerings by international platforms. This would not, however, hinder the partnership between XP International and Kalshi, according to a source, because everything happens outside the national territory, following U.S. regulation.
The regulation caught the market by surprise by significantly restricting the prediction market, but it was somewhat expected, says Filipe Senna, a partner at Jantalia Advogados and secretary of the Gaming and Betting Law Committee of the OAB/DF. “It ends up protecting already regulated markets but does not prevent the debate from deepening in the future.”
Some people argue that the predictive market fits within the entertainment field, while others see it as an informative tool.
“It can be both, encompassing politics, sports, financial instruments, or everyday events,” says Senna. “Even though it’s a bit different, it collides in many points with betting firms.”
If the understanding is that the prediction market operates through derivatives, companies must comply with CVM and Central Bank rules. “I believe these markets are not specifically derivatives, but operating without rules, as if it were a bet among friends, is not viable due to complexity.”
The lawyer, author of the book “A Regulação da Sorte na Internet” (“The Regulation of Luck on the Internet”), notes that in the United States, many companies in the sector act as a form of protection for some market movements or real events. For the general public, there is a 40-second delay for a transaction to be executed, while professionals who pay a subscription execute the operation without delay. “For the ordinary user, it is an activity that requires attention, or they risk being fooled.”
For Luiz Felipe Maia, a partner at Maia Yoshiyasu Advogados, there is an indirect effect of excluding non-financial players. It is not formal by institution type, but it restricts the field of action to structures more typical of the regulated financial market. The regulation directs the sector toward classic underlying assets (interest rates, exchange rates, indices, commodities) and distances structures based on events or uncertain outcomes that lack measurable economic nature.
“The regulatory movement is not just about organizing the market but defining a boundary—separating financial derivatives from instruments that the regulator sees as closer to betting.”
TozziniFreire’s Loureiro says that without the possibility of relying on derivatives regulation, it is important to discuss specific legislation for this rapidly growing market, to prevent a situation of unregulated provision from continuing, as happened with sports betting from 2018 to 2025.
