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Brazil’s stance on regulating election betting is firm, as it approved a resolution issued by the Superior Electoral Court (TSE) on September 17, 2024, specifically prohibiting wagers related to electoral processes. This action amends significant aspects of Article 3 and Article 5 of Resolution TSE 23.735/2024 and provides clearer guidelines on the limits of an electoral offense in relation to betting and digital platforms.
This action directly regulates and affects prediction market platforms, an increasingly popular form of betting globally, in particular in the United States, but also in other countries, now facing strict limitations in Brazil. According to this new set of guidelines, these platforms are not allowed to offer contracts related to election processes or sports results in Brazil.
Legal Basis: Protecting the Democratic Process
This prohibition is in line with Article 334 of the Electoral Code in Brazil, effective since 1965, aiming to protect the integrity and fairness of election processes in the country. This action avoids allowing financial or material rewards to sway voters in election processes and any practice that may constitute an abuse of economic power, or vote buying, and promotion of electoral campaigns.
With the emergence and proliferation of digital betting platforms in Brazil, it was determined that there was a need to clarify legal provisions to address new scenarios in this context. This action ensures that electoral processes in Brazil remain fair and free from any form of interference that may compromise voter independence.
In this context, local platforms such as Prévias, Palpitada, and Futuriza are not allowed to offer election betting on their platforms, while international structures such as Kalshi and XP’s partnership are restricted to offering economic indicator betting options, specifically “yes or no” types of bets, to clients with international accounts.
Clear Boundaries on Permitted Betting Activities
Brazilian legislation has set very specific limits on betting activities. Although election betting has been clearly prohibited by the TSE, sports betting has been clearly outlined by the Bets Law 14.790/2023, which permits fixed-odds betting on sports such as football, basketball, and esports.
Online casino games have also been included in Brazilian legislation, but only those operating under a fixed-odds system, where outcomes are determined by an algorithm, and users are informed in advance of possible rewards. This is a comprehensive list of all permitted betting activities.
Prediction market platforms operating in Brazil must therefore restrict their activities to areas such as economic indicators and avoid any association with election results or sports outcomes.
Expanded Definition of Electoral Offenses
One of the key aspects of this resolution is the detailed description of prohibited activities. A key addition to this resolution is as follows: “The use of commercial organizations, including those developed on online platforms or via the internet, for the sale, offering of goods or values, betting, distribution of merchandise, prizes or raffles… linked to candidates or to the result of an election… is included in the legal characterization of an electoral offense…”
This broad definition encompasses a variety of commercial forms, regardless of how they are designated or configured. It also includes indirect mechanisms, such as links to sites offering incentives related to the election, which redirect users to other sites.
Such activities are subject to sanctions for the abuse of economic power and for the illicit promotion of votes, in accordance with the Federal Constitution and the Electoral Code.
Enforcement and Judicial Authority
Another relevant change is related to the enforcement mechanisms, since the resolution grants authority to the electoral judges to enforce the regulations. Thus, in accordance with the updated article: “The competent electoral judge, in the regular exercise of electoral police power, shall adopt the necessary judicial measures to enforce the provisions of this article.”
In this way, the judiciary is empowered to take preventive and corrective measures against the illicit activities of betting, especially in the digital environment, where such activities can spread quickly.
Adapting Regulation to the Digital Era
In addition, the TSE’s resolution is part of a broader context aimed at adapting the existing regulations, which date back to the 1960s, to the digital environment and the financial technologies currently in place.
The emergence of betting and prediction markets in 2024, especially those related to forecasts about the election, led the court to clarify and strengthen the existing regulations.
Source: BNL Data
