Prediction markets: betting or not? Market challenges global regulation
Prediction markets, or forecasting markets, have been gaining increasing relevance in the digital landscape and attracting the attention of regulators, betting operators and companies in the financial sector. These platforms allow users to trade probabilities on future events, from election results to economic indicators or sporting events, creating a hybrid environment that mixes collective analysis, financial speculation and elements typical of online betting. The rapid expansion of the sector has also intensified discussions around are prediction markets gambling or finance, especially among regulators trying to classify these platforms within existing legal frameworks.
The subject has been the focus of debate worldwide, including in Latin America. Last week, the Argentine Justice banned the Polymarket platform and had its operations blocked in the country. However, the case does not concern only an isolated blocking measure, but also other debates that have led to the blocking of Polymarket and other companies in several countries: after all, should prediction markets be treated as betting, investments or a new digital category still under development? Part of this uncertainty is linked to the prediction markets legal status in the US, where regulators and courts continue to discuss how these products should be classified.
How prediction markets work
In practice, prediction markets operate in a way similar to trading exchanges. Users buy “positions” that represent the chance of a certain event happening. If the predicted outcome materialises, those who predicted correctly receive a financial return. Otherwise, they lose the amount invested.
This model has become even stronger with the advancement of cryptocurrencies and decentralised technologies, which have made it easier to create global platforms. As a result, anyone with internet access can take part in predictions about events ranging from political decisions to macroeconomic trends.
Supporters of this format say it can generate valuable insights, as it brings together the collective perception of thousands of participants. In some cases, prediction markets may even produce results closer to reality than traditional surveys or institutional analyses. It is like social proof.
The thin line between investment and gambling
Despite their analytical potential, prediction markets also raise important concerns. Regulators in different countries debate whether these platforms should follow financial market rules, online betting regulations or even a combination of both. This is because the functioning of these services involves characteristics of high financial risk, volatility and speculative behaviour, elements very common in both trading and gambling. In addition, the possibility of trading probabilities on more sensitive events, such as political crises or international conflicts, raises ethical and legal questions. In the United States, discussions involving CFTC oversight of prediction markets have become increasingly relevant, particularly as authorities assess whether certain event contracts resemble financial derivatives.
Experts and regulators point out that the lack of clear rules creates a regulatory “grey area”, in which operators are able to act internationally while local authorities face difficulties in fitting this type of activity into existing legislation.
In recent years, some governments in Europe, Asia and the Americas have begun to adopt a more cautious stance towards prediction markets. Among the main concerns are consumer protection, the risk of money laundering and the access of minors to high-risk financial products.
The Argentine episode involving the blocking of an international platform illustrates this movement towards greater oversight. Although the decision has a local focus, it shows how regulators are attentive to the growth of these digital operations and willing to act when they identify possible irregularities or a lack of licences. It is also impossible to ignore the connection between countries, sharing insights and observing other markets. If one country takes such a decision, other regions become alert to the issue.
Furthermore, the advancement of blockchain-based technologies makes the scenario even more complex. As many of these platforms operate in a decentralised way, controlling their activities may require international cooperation and new legal approaches. This complexity is one of the reasons why decentralized prediction markets continue to challenge existing regulatory frameworks across multiple jurisdictions.
Impacts on the iGaming sector
For the online betting industry, the growth of prediction markets represents both an opportunity and a challenge. On the one hand, the format may attract an audience more interested in data analysis and global events, expanding the reach of digital entertainment. On the other, the similarity to financial products may require new compliance structures and regulatory frameworks.
Traditional operators are closely monitoring this trend, assessing whether to integrate forecasting mechanisms into their portfolios or to keep their distance until there is greater legal clarity. The same applies to media companies and affiliates in the sector, which are beginning to explore content related to the topic to meet users’ curiosity.
And Brazil in this scenario?
Although prediction markets do not yet have a consolidated presence in Brazil, the topic is beginning to gain space in discussions about the future of digital entertainment, online investments and the betting sector itself. The country is going through an important moment of regulatory reorganisation, with the implementation of rules for sports betting and online gaming, which naturally broadens the debate on new digital modalities involving financial risk.
The discussion on how to classify these services — whether as digital investments, gambling or a hybrid product — is likely to receive even more attention in the coming years, considering the recent peak in growth that this market has been experiencing. The global trend points to a stricter regulatory environment, with requirements related to identity verification, financial transparency and player protection.
In practice, prediction markets may attract the interest of the Brazilian public by combining elements that are already popular in the country: the betting culture, the growth of trading platforms and the increasing use of cryptocurrencies. This hybrid format creates an experience different from traditional betting, as the focus is not only on the outcome of a sporting event but also on various events such as political decisions, economic trends or global developments.
A potentially large audience
Brazil has one of the largest digital markets in Latin America, with millions of users accustomed to using financial apps, online brokerages and entertainment platforms. In recent years, the growth of sports betting has shown how the Brazilian public responds quickly to new formats of games based on probabilities and data analysis. The young and highly connected profile of the Brazilian audience may accelerate the adoption of these platforms, provided they offer simple interfaces, fast payments and integration with popular digital payment methods.
Despite the growth potential, the main obstacle to the expansion of prediction markets in Brazil is the lack of a specific legal framework. Currently, national legislation treats financial activities and gambling separately, which makes it difficult to classify hybrid models.
If a platform allows profits based on the prediction of events, it may be interpreted either as an investment product or as a form of betting. This legal ambiguity tends to generate caution among authorities, which have been strengthening control mechanisms over digital operators following the regulation of betting.
Another relevant point is the requirement for strict consumer protection policies, such as identity verification, anti-money laundering measures and mechanisms to reduce the risks of problem gambling. These measures are already part of the new regulatory environment for online betting in the country and would likely also be applied to prediction markets.
This article was first published in Portuguese on 19 March 2026.
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