Kalshi Wants to Reverse Brazil's Prediction-Market Block Through Talks

In April 2026 Brazil's federal government revoked market access for US platform Kalshi. The reasoning: event contracts on elections, sports outcomes or macroeconomic data are legally bets, for which Kalshi lacks an SPA-MF licence. On June 11 co-founder Luana Lopes Lara explained the next steps to Folha de S. Paulo: no lawsuit, but education. iGamingToday.com covered the interview the same day.

Lopes Lara, a Brazilian and former MIT student, puts it plainly: 'We believe the ban was more lack of knowledge than ill intent. We want to explain what we do.' Her line is reasonable, because Kalshi does differ structurally from a sportsbook. The platform does not make money when users lose, it earns trading fees on event contracts. Buy a contract for USD 0.40, and if the event materialises you receive USD 1.

That is the legal sore point. Brazil's SPA-MF treats any monetised contract on an uncertain outcome as a bet, regardless of the operator's business model. Regular sportsbooks in Brazil pay BRL 30 million in licensing, comply with AML and player-protection duties and are taxed. Kalshi did none of that.

Lopes Lara points to the US precedent. In 2024 Kalshi prevailed against the CFTC and later federal courts and was allowed to offer event contracts on the 2024 US presidential election, eventually won by Donald Trump. That market alone generated more than USD 850 million in trading volume. Since 2024 Kalshi has expanded globally, currently with licensing applications in Mexico, Argentina and the United Arab Emirates.

Brazil is about more than a single market. Latin America is going through a wave of gambling reform in 2026. Argentina passed a federal law in January regulating sports betting and online casinos uniformly. Chile has been debating a similar draft since May. How Brazil classifies prediction markets will be read across the region as a precedent. Lopes Lara herself says: 'If Brazil understands us, the rest of the region will follow.'

From a German perspective the discussion has been theoretical so far, but that is changing. In 2025 BaFin reviewed two applications from Polymarket and an unnamed US provider, both rejected with reference to the 2021 State Treaty on Gambling. The GGL clearly classifies event contracts as unlicensed sports betting. A German trading on Polymarket or Kalshi automatically falls under the black-market regime and can reclaim losses under the BGH ruling of May 14, 2026 (XII ZR 187/25).

The legal question is how long that strict line can hold. Kalshi has argued for years that event contracts are financial products with a hedging function for firms and individuals. A farmer hedging against a bad corn crop, an airline hedging weather cancellations. The argument worked at the CFTC in the US, but in the EU MiFID II and national gambling laws interact awkwardly.

My impression after several conversations with Berlin gambling lawyers: Germany will keep treating prediction markets as bets until either the CJEU or the BVerfG rules otherwise. Until then the simple rule for German players: anyone wanting to bet on sports outcomes uses a GGL-licensed sportsbook, everything else is illegal and recoverable on loss. We keep watching Brazil's decision closely.