Brazilian resolution blocks Polymarket and Kalshi over election contracts

Brazil's National Monetary Council (CMN) barred contracts tied to election results and other events unrelated to economic and financial indicators from May 2026, according to a report. The measure also led to Polymarket and Kalshi being blocked in Brazil, the report said. Polymarket and Kalshi allow users to trade contracts whose value depends on election results, according to the report.

The restrictions affect prediction-market operators offering event contracts in Brazil.

The report said the US midterm elections are taking place at a time of expansion for prediction markets, where users can bet money on the outcome of events including electoral contests. Specialists cited in the report warned of risks of disinformation and of misreading election results. The report said surveys indicate most Americans oppose betting on elections, while estimates published by these platforms have become part of coverage by large media outlets.

Davina Hurt, director of governmental ethics at the Markkula Center for Applied Ethics at Santa Clara University, said such tools have become central to how the American electorate follows elections. Hurt said: “They have become increasingly part of how Americans understand elections”. She said the point is being reached where financial-market expectations weigh more in the public mind than votes. Hurt said a high probability is not a promise, and that a forecast turning out wrong does not mean the choice was mistaken, though people will interpret it that way. The report said a divergence between prediction markets and the ballot result could be read as a sign of electoral fraud even without any irregularity.

Kalshi acknowledges that the probabilities it publishes do not guarantee results, according to the report. Kalshi argues that attempts to manipulate the estimates tend to be offset by trading by other users of the platform. Elisabeth Diana, Kalshi's communications director, told AFP that “Kalshi should be seen as a complement to traditional polling”. Polymarket did not respond to requests for comment, the report said.

The report said a case in the June primary for mayor of Los Angeles illustrated the risks the specialists identified. After the defeat of Republican Spencer Pratt, right-wing influencers made accusations of electoral fraud based on platform estimates indicating chances the candidate would advance to the general election, according to the report. The report said some posts with false information on the social network X appeared labelled as a “paid partnership”. Michael Sánchez, a spokesperson for the Los Angeles County Registrar-Recorder/County Clerk, said: “the June primary showed how expectations about an election can be confused with the results”. The report said the episode led Polymarket and Kalshi to take measures on the publication of this type of content. In a document obtained exclusively by AFP, Kalshi instructed partners not to question official election results without grounds, according to the report. According to the document, partners “must not question the integrity or accuracy of any official result of the vote count, court decision or other official or formal determination linked to the electoral process”. Kalshi also said it will terminate contracts with partners that make unproven accusations that an election result was manipulated, rigged or compromised, the report said.

Prediction markets face court disputes in the US over which rules they must follow, with the central question being whether the platforms should be regulated as commodity markets or subject to betting laws, according to the report. Jared DeMarinis, who administers elections in Maryland, requested an assessment of the legality of bets linked to electoral contests in his state, the report said. In an interview with AFP, DeMarinis also barred poll workers from betting on election results. DeMarinis said: “Now more gasoline has simply been thrown on it by involving money in this. The last thing one wants is for the legitimacy of the result to be called into question”.