Key facts
- Polymarket priced Lula's victory at 20% before the Brazilian presidential election.
- Lula defeated Jair Bolsonaro to win his fourth term as president.
- Brazil banned prediction market platforms in April, citing regulatory concerns.
- The market attracted only 4.5% of the volume seen in the 2024 U.S. presidential election market.
Prediction markets significantly misjudged the outcome of Brazil's presidential election, with Polymarket pricing Luiz Inácio Lula da Silva's chances at just 20% before he ultimately defeated Jair Bolsonaro. Experts suggest Brazil's ban on prediction markets and a large influx of retail investors diluted the expertise of market participants. One trader, FhantomBets, claimed that retail traders inflated Bolsonaro's odds, while CoinShares researcher Luke Nolan pointed to Brazil's ban on such platforms as a more significant factor. TxODDS CEO Einar Knobel agreed, noting that the market was largely set by non-Brazilian participants trading on headlines and first-round results, with thin liquidity and a lack of local knowledge contributing to the mispricing.