Argentina deems Polymarket an ‘unsafe environment’

(AsiaGameHub) –  

Lucía Gando, Editor of SBC Noticias, delves into the legal and regulatory details behind the Buenos Aires courts’ decision to ban Polymarket and other prediction market platforms across Argentina

This ruling marks a setback for prediction market startups and their investors, while also sparking a wider debate about whether these platforms can gain a foothold in South America.

On Tuesday, Argentina became the first South American country to enact a full ban on prediction market operations, following an investigation focused specifically on Polymarket.

International media outlets have reported that Buenos Aires courts issued a “federal block” of the platform, sparked by a legal case filed by LOTBA, the Buenos Aires City Lottery.

Media coverage has characterized this decision as a major blow to the global expansion ambitions of prediction market operators, adding to the growing wave of regulatory controversies across South America.

This Argentine ban follows Kalshi’s launch in Brazil earlier this month, a move that was immediately challenged by established betting market players. Both industry groups and Brazilian authorities have stated there is no valid justification for Kalshi to operate in the country.

As such, across both Europe and South America, expanding prediction market access has become a critical priority to reaffirm the products’ unique classification as derivative-based financial contracts — a designation made by the U.S. Commodity Futures Trading Commission (CFTC).

Buenos Aires Regulatory Intervention

Buenos Aires courts have put a stop to the intended growth of prediction market venture backers.

The key question the courts are posing is this: Is U.S. regulatory validation alone enough to justify launching prediction markets in South American jurisdictions, and what framework should be used to assess whether these platforms are viable and distinct from gambling operations?

The Buenos Aires lottery regulator did not ask the courts to draw a clear distinction between prediction markets and other products; instead, it requested a comprehensive, systemic response to prediction markets and event-based contracts.

The regulator’s case against Polymarket centered on the platform’s lack of adequate consumer protections. The authority believes enforcement action is warranted based on the public safety risks of engaging with unvetted digital platforms.

LOTBA, acting in its role as a provincial gambling regulator, petitioned the courts to classify Polymarket’s activities as a violation of Article 301 bis of Argentina’s Penal Code, which prohibits the operation of unlicensed gambling services.

The regulator’s argument is straightforward: no matter how much financial polish they have, prediction markets replicate the core mechanics of betting — users wager money on uncertain outcomes, prices reflect implied probabilities, and the platform facilitates these transactions.

According to LOTBA, these features do more than blur the line between categories; they amplify risk significantly. The absence of effective safeguards, identity checks, age verification, and traceable payment controls turns these platforms into unlicensed gambling operations with minimal accountability and few protections for participants.

Regulatory Environment Concerns

Most importantly, the regulator did not limit its request to just Buenos Aires. Instead, it sought a nationwide intervention, arguing that a digital product with borderless reach cannot reasonably be contained within provincial boundaries.

Fragmented oversight in this context amounts to no oversight at all. Argentina’s response, then, is less a formal rejection of financial innovation and more a practical judgment about the operating environment for these platforms.

The question for regulators was not whether prediction markets could theoretically be classified as derivatives, but rather, given their widespread accessibility and total lack of proper controls, whether these platforms can even qualify or function in practice as gambling operations.

Argentina’s Ruling Is Not a One-Size-Fits-All Solution

Whether Buenos Aires’ regulatory logic will be adopted elsewhere remains an open question. Few South American jurisdictions combine Argentina’s patchwork of provincial licensing, coordinated lottery bodies, and aligned prosecutorial priorities. While the ruling may set a precedent, it will not be easy to replicate.

For neighboring markets such as Brazil and Mexico, the dilemma remains unresolved: classify prediction markets as financial instruments and risk allowing regulatory arbitrage, or label them as gambling and risk stifling this emerging form of digital trading.

For operators like Polymarket, expanding into additional Latin American markets remains possible — but it has become increasingly challenging and high-risk.

Argentina has, at the very least, shifted the terms of the global debate. The issue is no longer just how to classify prediction markets, but how to regulate them within sprawling digital ecosystems.

Whether other regions will follow suit will determine whether these platforms take root in Latin America or secure some form of market access, as prediction markets remain a marginalized segment for the time being.