Kalshi has partnered with Brazilian exchange XP, marking its first international expansion. The company has said it wants to go global, which could see its esports markets offered in as many as 140 countries. 

In a press release announcing the deal with XP, Kalshi co-founder Luana Lopes Lara, stated, “As a Brazilian, I couldn’t be more excited for XP to be Kalshi’s first brokerage partner outside the U.S. XP is one of Brazil’s largest financial institutions; expanding prediction markets to Brazil is an important step in providing more people around the world with access to fair, safe, and regulated markets.”

Initially, the partnership will focus on economic and financial events, but Lopes Lara said she wanted fast expansion. 

She added, “We see Brazil the way the US 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 US when starting.”

Sports Markets Driving Growth

The company’s value has skyrocketed since launching sports markets in the US last year. It is now valued at around $20 billion. When announcing its plans to go international in October last year, it was valued at around $5 billion. 

Beginning with markets on the Super Bowl, it now offers a wide range of markets across all major sports, including esports. 

The platform shows esports trading of almost $2 billion, although this figure is disputed by rival platform Polymarket, which claims the true value is only around $63 million. 

Nevertheless, it is sports that are driving growth. Sports markets now account for over 80% of all trading on the platform. 

Will Brazil Allow Sports Prediction Markets?

Brazil formally launched its sports betting market last year, officially approving esports gambling in April. The industry generated over $7 billion in revenue in its first year, through around 80 regulated companies. 

While giving out licenses to a limited number of platforms, the Ministry of Finance’s Secretariat of Prizes and Betting (SPA) has targeted unlicensed gambling. It has blocked over 19,000 unauthorized sites and removed illegal advertising.

It is unclear whether the country would categorize sports prediction markets as gambling. Polymarket already operates internationally, and while a growing number of countries have objected to its presence, Brazil is not listed as a restricted zone. 

Brazilian President Lula Critical of Gambling

As Kalshi was announcing its deal with XP to expand into Brazil, the country’s President, Luiz Inácio Lula da Silva (Lula), was warning residents about the risks of gambling. 

In a speech on International Women’s Day, Lula said gambling losses can destroy families. He stated, “It’s money meant for food, rent, and children’s school that disappears on the cell phone screen,” adding that the Brazilian government will work to limit the harm caused by online gambling.

Primarily, he was talking about online casinos, which the country is working to eradicate. The country has also threatened to tighten rules on sports betting. 

Lula approved a tax hike on the industry, while lawmakers have proposed several other restrictions. 

These include raising the age from 18 to 21 years old, introducing a deposit limit, banning advertising at night, and banning gambling sponsors in sports.

Whether these rules would apply to prediction markets remains to be seen. Lucas Rabechini, Director of Financial Products at XP, emphasized that the partnership with Kalshi would give Brazilians new investment opportunities. 

Rabechini stated, “We are bringing this instrument to help our clients invest better, with more alternatives for exposure to relevant economic events. Just as we democratized access to the stock exchange in the past, we are now taking another step by introducing a market model already used in advanced economies, always with responsibility, education, and governance.”