Prediction markets are facing growing criticism from regulated betting operators as platforms such as Kalshi expand internationally, raising concerns within the licensed gambling sector about regulatory arbitrage.
The debate intensified this week after US-based prediction market operator Kalshi partnered with Brazilian brokerage XP to offer event-based contracts to Brazilian investors through international brokerage accounts earlier today.
However, several regulated betting stakeholders have increasingly argued that prediction markets resemble sports betting and other wagering products while operating under financial market oversight rather than gambling regulation.
Industry representatives say the rapid growth of event-based contracts risks creating an uneven competitive landscape in markets where licensed betting operators face strict compliance requirements related to responsible gambling, taxation and advertising.
Prediction market operators, for their part, maintain that their products are fundamentally different from gambling and should be regulated as financial instruments.
Kalshi, which operates under oversight from the US Commodity Futures Trading Commission (CFTC), has positioned its contracts as risk management and forecasting tools rather than betting products.
Brazil currently does not have a dedicated regulatory framework for prediction markets. The country’s securities regulator, the Comissão de Valores Mobiliários (CVM), is expected to classify such instruments as derivatives and may initially restrict access to professional investors with at least BR$10m ($2m) in financial assets.
Kalshi processes roughly $120bn in annual trading volume, while analysts at Eilers & Krejcik estimate the global prediction market sector could eventually reach $1trn annually.
The expansion into Brazil marks the company’s first international move outside the United States and comes as debate over the regulatory status of prediction markets intensifies globally.
