The rise of sports betting in Brazil has made it common for people to try to profit from predicting outcomes: in the first half of 2025 alone, about 17.7 million Brazilians placed sports bets, according to Brazil’s Ministry of Finance.
Meanwhile, in the United States, a related but distinct model is gaining traction: prediction markets, where economic, political, and even pop culture events are turned into contracts traded like financial assets. At first glance, both involve “prediction,” but they operate in different spheres.
Here are 3 key differences:
1. In sports betting, users bet against the house, with fixed odds set in advance: In Brazil’s dominant fixed‑odds model, the platform sets the payout rate (the “odds”) for each possible outcome, who wins the game, how many goals are scored, a player’s performance, and so on. The bettor knows in advance how much they can win or lose, and once the bet is placed, the odds don’t change for that ticket. The house takes the risk, calculates probabilities, and adjusts the odds to profit over time. It’s a system structured as entertainment and gambling.
2. In prediction markets, participants trade contracts with one another, and prices reflect the probabilities associated with these contracts: Instead of betting against the house, users buy and sell contracts tied to specific questions: “Will this candidate win the election?” “Will inflation exceed X%?”, “Will the regulator make a certain decision?” Each contract pays a fixed amount if the event occurs (typically structured as “yes” or “no”) and nothing if it doesn’t. The price of these contracts fluctuates, usually between US$0.01 and US$0.99, according to the market’s collective view of the event’s likelihood. Platforms make money by charging fees on each trade, as well as on deposits and withdrawals.
3. While Brazil consolidates sports betting, prediction markets remain in a regulatory gray area here: In the United States, regulated prediction markets coexist with decentralized, blockchain‑based platforms like Polymarket, which operate under varying degrees of supervision and have already faced scrutiny from the CFTC. Countries like the U.S. and New Zealand have specific frameworks that place these markets somewhere between financial instruments and games. In Brazil, however, the law has not yet classified prediction markets: fixed‑odds sports betting is regulated and widespread, but platforms like Kalshi’s prediction markets currently lack a legal basis to operate.
For regulators and the financial industry, the line between “bet” and “information market” is strategic. Understanding where one ends and the other begins helps stakeholders see both the risks and the opportunities these platforms bring. On one side, concerns about gambling addiction and consumer protection remain. On the other hand, there’s growing interest in using prediction markets as an additional source of data for economic policy, investment, and risk management.
