Prediction Markets in Brazil: regulatory boundaries and the closing of classification pathways

The long-anticipated moment in which Brazilian authorities would take a clearer position on prediction markets has arrived, in the form of a coordinated action by the Ministry of Finance, the National Monetary Council, and the Secretariat of Prizes and Betting (SPA).

The publication, on the same day (April 24, 2026), of CMN Resolution No. 5,298/2026 and Technical Note SEI No. 2,958/2026/MF issued by the Secretariat of Prizes and Betting (SPA) not only provided interpretative guidance but also signaled a well-defined institutional stance on the matter.

As a result, the legal status of prediction markets has rapidly shifted from theoretical uncertainty to a scenario of imminent enforcement and sanctions, including the blocking of prediction market platforms in Brazil, based on the understanding that such activities constitute irregular operations, lacking a valid classification under the current legal framework.

From the SPA’s perspective, the analysis was based on a functional approach. The Technical Note disregarded the relevance of the terminology adopted by market participants and instead focused the classification on the structural elements of the operation. In this regard, it concluded that prediction markets replicate the logic of fixed-odds betting, particularly due to the presence of (i) risk assumption by the user, (ii) linkage to a future and uncertain event, and (iii) the expectation of obtaining a determinable prize.

Recurring market arguments were also expressly rejected, such as the peer-to-peer nature of such platforms, dynamic price formation, and the possibility of trading positions, on the grounds that these features are already present in regulated betting models, such as betting exchanges, and are therefore insufficient to alter the legal nature of the activity.

The conclusion is straightforward and practically significant:

By replicating the economic and functional logic of fixed-odds betting, these platforms, in the SPA’s view, are subject to the corresponding legal framework. As they operate outside the scenarios authorized under Brazilian law, their activities are deemed irregular and, under the current framework, are not capable of being regularized.

In parallel, CMN Resolution No. 5,298/2026 addressed the treatment of prediction contracts as derivatives, an alternative that had already been explored by market participants in Brazil, inspired by the regulatory approach adopted by U.S. market regulators.

The rule expressly provides that derivative contracts that are not linked to a clear economic-financial benchmark may not be offered or traded in Brazil, regardless of their underlying subject matter. The regulation and enforcement of this directive will fall under the authority of the Brazilian Securities and Exchange Commission (CVM), which already supervises the derivatives market.

In practice, the CMN Resolution limits the possibility of structuring prediction markets as derivatives by establishing certain requirements to be met. The most relevant of these requirements for the sector is the need to link the contract to an economic benchmark that reflects a relevant economic-financial interest, as determined by a reliable price or methodology.

It is important to note that the rule does not prohibit the structuring of prediction contracts as derivatives; rather, it imposes a legal structure that complies with regulatory requirements, in accordance with the CVM’s interpretation. As a result, regulated market participants interested in exploring prediction markets are expected to seek contractual and financial structures capable of meeting these regulatory requirements, with the main challenge being to persuade the CVM of the appropriateness of such contracts. In this context, the discussion ceases to be predominantly formal and becomes essentially substantive. The central issue is no longer the label adopted, but rather the economic function of the instrument and the nature of its underlying asset.

More than a marginal limitation, this represents a structural reshaping that is likely to alter competitive dynamics, communication with the public, and the economic exploitation of prediction platforms.

From the perspective of the unregulated sector, strong criticism and attempts at reversal have already emerged, such as the legislative decree bill introduced on the same day as the publication of CMN Resolution No. 5,298/2026, aimed at suspending its effects on the grounds of an alleged overreach of regulatory authority

A combined reading of the SPA Technical Note and the CMN Resolution suggests a coordinated regulatory approach:

On the one hand, such structures are deemed to qualify as fixed-odds betting and are therefore prohibited, as they are not authorized by the SPA; on the other hand, their use as derivatives is prohibited in the absence of a clear economic basis. The practical effect is the closing of the two main legal pathways that had been relied upon to support the operation of these models in the country.

What’s next?

In the short term, the regulatory environment points to a tightening of restrictions.

Prediction market platforms, as currently operated, are not only deemed irregular, but also lack a clear path for adaptation or regularization under the current framework, whether as authorized betting or as securities.

This does not mean, however, that the discussion is definitively closed.

At least three possible avenues for further development are expected:

• legislative, with a potential expansion of the scope of fixed-odds betting or the creation of a specific category for prediction markets;
• regulatory, with the CVM providing greater clarity on the concept of an economic-financial benchmark and potentially allowing controlled access for certain event contracts; and
• structural, with business models being adapted to effectively qualify as financial instruments, which will require a clear departure from the logic of betting.

Until such developments occur, the institutional message is relatively unequivocal: the current prediction markets model is not compatible with the Brazilian legal framework.