Kalshi Goes Global: Why Brazil Is the First Stop in Prediction Markets’ International Land Grab

Kalshi’s March 9 partnership with XP Inc. marks the first time a regulated U.S. prediction market has formally expanded abroad — and the choice of Brazil reveals a deliberate strategic playbook built on the “derivatives, not gambling” framework that could reshape how the world classifies event contracts. The deal pairs Kalshi’s exchange technology with Brazil’s largest independent brokerage (R$1.9 trillion in assets under management, 4.7 million clients) to offer approximately 60 financial and economic event contracts to Brazilian investors through XP’s Clear Corretora platform. By deliberately excluding sports and entertainment markets at launch and routing all trades through XP’s U.S.-registered broker-dealer arm, Kalshi is stress-testing a regulatory architecture designed to bypass gambling laws entirely. The timing is acute: Kalshi faces 19 active lawsuits and a 36-state attorney general coalition at home, even as its annualized revenue run rate has surpassed $1 billion and its valuation eyes $20 billion.

The deal structure reveals Kalshi’s global distribution blueprint

The partnership announced from São Paulo on March 9, 2026 is not a licensing deal or a joint venture — it is a brokerage distribution arrangement that mirrors the model Kalshi has used to explosive effect domestically with Robinhood, which now accounts for more than half of Kalshi’s trading volume. In a market where sportsbooks and prediction markets are locked in a power struggle, the international play opens an entirely new front. XP International handles local distribution, client relationships, and regulatory interactions in Brazil. Kalshi provides trading technology, market design, and risk-management tools. All transactions execute on Kalshi’s exchange in the United States.

The mechanical structure matters enormously. Products are listed through XP Investments US, LLC, a U.S.-registered broker-dealer and member of both FINRA and NFA. Brazilian clients of Clear Corretora who hold international investment accounts access a curated menu of Kalshi contracts, with funds transferred abroad via foreign exchange transaction. This means the trades technically occur within the existing U.S. regulatory perimeter — a CFTC-regulated designated contract market — rather than requiring new Brazilian authorization. Revenue from distribution fees is split between the parties, though specific financial terms remain undisclosed.

The initial offering spans roughly 60 contracts covering S&P 500 closing levels, Federal Reserve interest rate decisions, Bitcoin price milestones, dollar/real exchange rate movements, Brazilian unemployment rates, and inflation prints. The deliberate focus on financial and economic events — with no sports, entertainment, or political contracts at launch — is not a product limitation but a regulatory strategy.

“We see many structured notes and interest rate options being traded in traditional markets. In forecast markets, we see something comparable in terms of assets and return.”
— Lucas Rabechini, XP’s Director of Financial Products

Kalshi co-founder Luana Lopes Lara, who was raised in Rio de Janeiro before attending MIT and co-founding the company in 2018, provided the most revealing strategic commentary.

“It makes sense for us to go through these international partners. They already have the customers, they have the brand. We see Brazil the way the U.S. was years ago with prediction markets. It’s our second country, so we will be able to go a lot faster than we did in the U.S. when starting.”
— Luana Lopes Lara, Kalshi Co-Founder

With Kalshi on pace for $120 billion in annualized trading volume — having crossed $100 billion by March 2025 — Lopes Lara suggested international expansion with major partners could multiply that volume “by 10, 100 times.”

Why Brazil: the most underappreciated fintech market in the world

The choice of Brazil as Kalshi’s first international market reflects a convergence of personal connection, market fundamentals, and regulatory timing that no other country can match.

Start with sheer scale. Brazil’s 215 million people make it the world’s fifth-largest country, with 183 million internet users (86% penetration) and smartphone adoption projected to reach 97% by 2029. Brazilians spend over nine hours per day online — among the highest rates globally. But the truly distinctive factor is financial infrastructure. Brazil’s Pix instant payment system, launched by the Central Bank in November 2020, has onboarded 175 million users — 93% of the adult population — processing R$26.4 trillion across 63.4 billion transactions in 2024 alone. Cash transactions have plummeted from over 40% of consumer payments in 2019 to single digits by 2024, though exact figures vary by survey methodology. Paul Krugman called Pix “the future of money” in July 2025.

This digital financial infrastructure sits atop a remarkably sophisticated investing culture. B3, Brazil’s stock exchange, has nearly 4 million individual investors with positions in custody, processing R$7.2 trillion in equity trading volume in 2024. XP itself pioneered the independent brokerage model that democratized market access — with Q3 2025 net revenue of R$4.55 billion (up 19% YoY) and a network of 18,200 investment advisors, the company’s distribution power dwarfs most fintech platforms. The country hosts 1,500+ fintech companies — 30% of Latin America’s total — including Nubank, which serves over 100 million customers. Brazil’s open finance ecosystem is the world’s largest, with 60 million active consents and 2 billion integrations.

The sports betting parallel is equally compelling. Brazil’s regulated gambling market generated an estimated R$24.2 billion (~$4.1 billion) in gross gaming revenue in its first year of regulation, with 79 licensed operators and 52 million people engaged in online gambling. Before regulation took effect on January 1, 2025, the market generated an estimated R$120 billion in handle. The country’s appetite for financial risk-taking — fueled by extreme interest rate volatility (the Selic rate swung from 14% to 2% and back above 13% in recent years) — creates natural demand for instruments that let retail investors express views on macroeconomic outcomes.

Then there is the personal dimension. Lopes Lara’s Brazilian heritage provides cultural fluency, local relationships, and strategic credibility that cannot be replicated. Combined with 2026 being both a World Cup and Brazilian election year — two event categories that historically drive prediction market demand worldwide — the timing is calculated.

Brazil’s regulatory grey zone is a feature, not a bug

Brazil’s prediction market landscape exists in a regulatory interstitial space that is simultaneously the sector’s greatest opportunity and its most significant risk. Three regulators have potential claims over the space, and none has established clear authority.

The CVM (Comissão de Valores Mobiliários, Brazil’s securities regulator) took the most decisive step in February 2026, approving B3 to launch the country’s first domestic prediction market products structured as financial derivatives — binary yes/no contracts tied to the U.S. dollar, Ibovespa index, and Bitcoin.

“The world of derivatives is increasingly approaching the frontier of the predictive market.”
— Gilson Finkelsztain, B3 President

However, B3’s initial products are restricted to professional investors with more than R$10 million (~$1.9 million) in financial assets, leaving the retail market wide open.

The SPA (Secretariat of Prizes and Bets, under the Ministry of Finance), which regulates sports betting and iGaming since January 2025, issued a pointed statement on the same day as Kalshi’s launch declaring it “has not formally authorised Brazilian companies to operate in the segment” and that “technical analyses” were ongoing. The enforcement apparatus behind the SPA is formidable: Brazil’s SIGAP (Integrated Gambling Management System) requires operators to report all transactions in real-time to the government, and authorities have already blocked over 18,000 illegal gambling sites in the first year of enforcement. Meanwhile, the Central Bank maintains potential oversight through its payment systems and financial stability mandates.

Legal experts describe the resulting situation with striking consistency. Andre Santa Ritta of Pinheiro Neto Advogados told iGaming Business: “In Brazil, you have this regulatory grey zone in which we don’t know yet where to place the predictions market industry, because it’s not iGaming and it’s not within this framework of the fixed-odds betting industry.”

Kalshi’s structural solution — routing all trades through a U.S. broker-dealer on a CFTC-regulated exchange — is designed to sidestep this ambiguity entirely. Brazilian clients are technically accessing international investment products through XP’s established cross-border infrastructure, not trading on a Brazilian prediction market. The CVM reportedly plans to finalize its prediction market framework by mid-2026, at which point Kalshi will already have an established client base and operational track record.

The Brazilian regulated betting industry has responded aggressively. The IBJR (Instituto Brasileiro de Jogo Responsável), led by Betsson’s Brazilian Managing Partner André Gelfi, filed a formal technical note with the SPA requesting that authorities block Kalshi and Polymarket. Licensed operators — who paid R$30 million each for five-year federal betting licenses — view prediction markets as competitors exploiting a regulatory gap.

“When the underlying event is a sports outcome, the mechanics are essentially identical to fixed-odds betting… Calling that a ‘derivative’ doesn’t change the nature of the activity.”
— André Gelfi, Betsson Managing Partner for Brazil and IBJR President

For now, Kalshi has neutralized this objection by launching exclusively with financial and economic contracts where the hedging rationale is strongest.

Kalshi’s domestic paradox: explosive growth amid existential legal risk

The Brazil expansion cannot be understood apart from Kalshi’s extraordinary — and extraordinarily contested — position in the United States. The company’s trajectory since its November 2020 CFTC designation as a designated contract market has been defined by a paradox: the faster it grows, the more legal threats it accumulates. For a deeper look at this escalating conflict, see our coverage of Kalshi’s legal war and the path to the Supreme Court.

The growth metrics are staggering. Kalshi processed $23.8 billion in nominal trading volume in 2025, a 1,108% year-over-year increase, with 97 million total trades. Revenue reached $263.5 million, up 994% from $24 million in 2024. The Super Bowl LX weekend alone generated over $1 billion in volume. By early 2026, Kalshi’s annualized revenue run rate had crossed $1 billion, and the Wall Street Journal reported on March 7 that the company was in discussions for a funding round at approximately $20 billion — nearly doubling the $11 billion valuation from its December 2025 Series E. Key distribution partnerships with Robinhood (which drove more than half of Kalshi’s volume), Coinbase, CNBC, and CNN have pushed prediction markets into mainstream financial consciousness.

As of March 2026, Kalshi faces approximately 19 federal and state lawsuits, with courts deeply and irreconcilably split. Federal judges in New Jersey, Tennessee, Connecticut, and California have sided with Kalshi’s argument that CFTC jurisdiction preempts state gambling laws. Judges in Maryland, Massachusetts, Ohio, and Nevada (on reversal) have ruled the opposite. The Massachusetts Superior Court granted a preliminary injunction in January 2026 blocking sports contracts entirely. On March 10, 2026 — the day after the Brazil partnership was announced — an Ohio federal judge denied Kalshi’s preliminary injunction, calling it “absurd” to classify sports event contracts as swaps.

A 36-state attorney general coalition has filed amicus briefs arguing Congress never intended to strip states of gambling regulation authority. Tribal nations have filed separate challenges under the Indian Gaming Regulatory Act. The escalating circuit splits — particularly the 6th Circuit contradiction between Tennessee and Ohio — strongly suggest Supreme Court review is on the horizon.

The Trump administration’s CFTC, under Chairman Michael Selig (sworn in December 2025), has been aggressively supportive: withdrawing Biden-era proposed bans on political and sports event contracts, filing amicus briefs defending exclusive federal jurisdiction, and announcing new rulemaking to establish “clear rules” for prediction markets. But federal agency support cannot resolve the constitutional federalism question that state courts are now forcing.

International expansion thus serves a dual strategic purpose: revenue diversification away from the legally contested U.S. sports market, and proof-of-concept for the financial-events-only model that faces far less regulatory friction.

The global land grab has begun, but the rules remain unwritten

Kalshi’s Brazil move is the opening salvo in what is shaping up to be prediction markets’ most consequential year internationally. The global market exploded from under $100 million per month in early 2024 to over $44 billion in total 2025 volume — a roughly 130-fold increase. Eilers & Krejcik Gaming projects the sector on a path toward $1 trillion in annual volume, while Citizens Financial Group estimates industry revenues could reach $10 billion by 2030. The prediction market wars are escalating on every front.

The competitive field has expanded dramatically. Polymarket led with $21.5 billion in 2025 volume and a $9 billion valuation following a $2 billion investment from Intercontinental Exchange (the NYSE’s parent company), but its crypto-native, permissionless architecture has gotten it blocked or restricted in 33+ jurisdictions — including France, Germany, Italy, Belgium, the UK, the Netherlands, Australia, and Singapore. DraftKings launched its Predictions product in December 2025 across 38 states, with CEO Jason Robins projecting up to $10 billion in annual gross revenue potential. Robinhood called prediction markets its fastest-growing product ever, with a $300-435 million revenue run rate, and is building its own CFTC-licensed exchange through its Rothera joint venture with Susquehanna International Group. FanDuel partnered with CME Group. Crypto.com launched a standalone prediction app and serves as exchange infrastructure for multiple front-end operators. At least five CFTC-registered prediction market exchanges are expected to be fully operational by mid-2026.

Yet no country outside the United States has explicitly created a regulatory pathway treating prediction markets as financial derivatives. This is the central fact shaping international expansion strategy. The UK’s FCA permanently banned retail binary options in 2019, effectively blocking prediction market products structured as financial instruments. The EU’s ESMA binary options ban (initially temporary in 2018, later made permanent at national levels) creates similar barriers. Singapore, Australia, and most of Asia classify prediction markets as gambling requiring local licenses.

Brazil’s emerging approach — where the CVM has authorized derivatives-style prediction market products while the gambling regulator has not claimed jurisdiction — represents a potential global template. If Brazil successfully establishes prediction markets under its securities framework, it creates precedent that other Latin American and emerging markets may follow. The historical parallel to credit default swaps is instructive: the Commodity Futures Modernization Act of 2000 explicitly exempted derivatives from state gambling laws, transforming instruments that were previously unenforceable gambling contracts into a multi-trillion-dollar market. The prediction market industry is attempting the same regulatory alchemy on a global scale.

The derivatives-not-gambling framing will define the industry’s future

The strategic decision to lead with economic and financial events in Brazil — inflation, interest rates, exchange rates — rather than sports or politics is the single most revealing aspect of Kalshi’s international playbook. It exposes the industry’s core strategic insight: the classification of prediction markets as derivatives rather than gambling carries cascading implications for tax treatment, investor protections, market access, and ultimately, which regulators control a market that could reach $1 trillion.

As derivatives, prediction market profits may qualify for 60/40 capital gains treatment (60% long-term, 40% short-term regardless of holding period) under Section 1256 of the U.S. tax code. As gambling, winnings face ordinary income rates with losses deductible only up to winnings. As derivatives, contracts fall under CFTC anti-fraud and anti-manipulation provisions with clearing through registered clearinghouses. As gambling, state gaming commissions regulate consumer protection with responsible gambling mandates. As derivatives, anyone with a brokerage account can trade in all 50 states. As gambling, access requires state-by-state licensing, potentially restricting the market to the 26 states with legal online sports betting.

The historical precedents for financial products straddling this line are instructive — and cautionary. Weather derivatives, traded on CME, demonstrate that event contracts on non-financial outcomes can serve legitimate hedging purposes. But binary options traced a more troubling arc: classified as gambling in the UK under the Gambling Commission, reclassified as financial instruments under MiFID II, then banned entirely for retail consumers by ESMA and the FCA due to consumer harm and fraud. The Football Index collapse of 2021 — a gambling product dressed as a financial market that cost participants £124 million — illustrates the dangers of regulatory gaps between gambling and financial frameworks.

Kalshi’s challenge is that its domestic business tells a different story than its international pitch. At home, sports contracts generate 89% of fee revenue — a product mix that strengthens the argument of state attorneys general who see prediction markets as sportsbooks with a regulatory loophole. Internationally, the financial-events-only model reinforces the derivatives framing but raises questions about whether it can generate sufficient volume to justify the expansion investment. Whether Kalshi eventually introduces sports contracts in Brazil — and whether Brazilian regulators permit it — will be the definitive test of the derivatives classification strategy.

Conclusion

Kalshi’s Brazil partnership is less a single market entry than a proof-of-concept for how prediction markets can scale globally through the regulated financial system rather than the gambling ecosystem. The brokerage distribution model (partner with established financial institutions, route trades through U.S. infrastructure, launch with economic events that maximize the derivatives argument) is explicitly designed to be replicated. Lopes Lara confirmed as much: “We are also starting to look at other countries.”

Three dynamics will determine whether this model succeeds. First, Brazil’s regulatory resolution — whether the CVM, SPA, or a new framework ultimately claims jurisdiction over prediction markets will set precedent across Latin America. Second, the U.S. Supreme Court’s eventual ruling on whether CFTC designation preempts state gambling laws will either validate or demolish the legal foundation Kalshi’s entire international strategy rests on. Third, whether financial-only contracts can generate meaningful trading volume without sports — the product category that drove 89% of Kalshi’s domestic revenue — will determine if the derivatives framing is commercially viable or merely a regulatory entry strategy.

The prediction market industry crossed $44 billion in volume in 2025 with virtually no international regulated infrastructure. Brazil is the first attempt to build that infrastructure through the financial system. If it works, the template is ready for deployment across every country with a securities regulator willing to classify event contracts as derivatives. The land grab is underway, and the regulatory classification each country chooses — derivatives or gambling — will determine who controls the next trillion-dollar market.

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Sources

• Kalshi-XP International Partnership Announcement — Kalshi News
• CFTC Designation Order for Kalshi as DCM — U.S. Commodity Futures Trading Commission
• Chairman Michael S. Selig Sworn In — U.S. Commodity Futures Trading Commission
• FCA Confirms Permanent Ban on Binary Options — UK Financial Conduct Authority
• XP Investments US, LLC — Broker-Dealer Registration — FINRA BrokerCheck
• 2026 FIFA World Cup Official Page — FIFA
• Football Index Collapse: Lessons Learned — UK Parliament (Hansard)
• Commodity Futures Modernization Act of 2000 — U.S. Congress