Lula wins Brazil runoff after prediction markets favored Bolsonaro

Brazil's President and presidential candidate Luiz Inacio Lula da Silva waves a national flag during a campaign rally in Sao Paulo, Brazil, on Sept. 26, 2026.

Miguel Schincariol | Afp | Getty Images

Luiz Inácio Lula da Silva was reelected president of Brazil on Sunday in a runoff election, an upset that prediction markets odds failed to anticipate.

Lula defeated Flávio Bolsonaro, the right-wing candidate and son of former president Jair Bolsonaro, by 51.8% to 48.2%, according to the country's Superior Electoral Court.

As late as Sunday afternoon, Lula remained a significant underdog on prediction markets. Even just after 8:30 p.m. ET on Sunday, Lula's odds were at 21% on Kalshi.

Bolsonaro's odds on prediction markets surged after first-round voting on Oct. 4, with both Kalshi and Polymarket giving Bolsonaro an over 80% chance of ousting Lula. The Kalshi contract asked, "Brazil Presidential election winner?" and was verified by reporting from the Associated Press.

Kalshi co-founder and CEO Tarek Mansour has previously defended Kalshi's election contracts. In August, Kalshi reflected a 95% likelihood of Wisconsin Democratic socialist Francesca Hong winning the Democratic gubernatorial primary over Milwaukee County executive David Crowley. Instead, Hong lost the race by less than 1 percentage point.

"Before the 'prediction markets got it wrong' headlines roll in: a 5% probability doesn't mean it won't happen," Mansour wrote in an Aug. 12 social media post on X. "It means it should happen 1 in 20 times. If 5% candidates never won, the markets would be broken."

Odds and prediction market platforms do not use methodologies used by traditional political polling, and therefore are not substitutes for political polls.

Unlike prediction market odds, which pointed to a clear Bolsonaro victory, political polls showed a tight race in the days leading up to the contest.

Brazil's Supreme Court also extended voting for two hours late Sunday, which Bolsonaro argued hurt his chances of winning the presidency. Bolsonaro is expected to challenge the outcome, Reuters reported. 

Following Lula's victory, Brazil-linked stocks and ETFs slid on Monday. The iShares MSCI Brazil ETF (EWZ) shed 22%, while U.S.-traded shares of Itau Unibanco and Banco Bradesco tanked 20% and nearly 30%, respectively. Brewer Ambev and Petrobras each declined more than 15%. 

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.