TLDR
- Polymarket has gone to a Dutch court to overturn the Netherlands’ ban on its prediction market.
- The company argues its event contracts are financial products that belong under the AFM, not the gambling regulator.
- The KSA ruled Polymarket blocked Dutch users one day late and moved to collect a €420,000 ($471,000) penalty.
- The regulator rejected Polymarket’s objection on June 23, quoting the platform’s own help page describing it as betting.
- The Netherlands joins a list of countries, including France, Spain and Brazil, that treat Polymarket as unlicensed gambling.
Polymarket has gone to court in the Netherlands to try to overturn a ban on its prediction market. The company confirmed the move, according to Dutch financial daily Het Financieele Dagblad.
Polymarket argues that it offers financial products, not bets. It says its event contracts work like futures and should be supervised by the Netherlands Authority for the Financial Markets (AFM).
The Netherlands Gambling Authority (KSA) has already rejected this argument. The regulator treats the platform as an unlicensed gambling service.
How the Dutch Ban Started
The case goes back to a Jan. 20 order against Polymarket’s operator. The KSA told the company to stop serving Dutch users within four weeks.
If it failed to do so, it would pay €420,000 ($471,000) per week, up to a maximum of €840,000 ($943,000).
Before issuing the order, KSA inspectors tested the platform themselves. They opened an account from a Dutch IP address and deposited €10 by card from a Dutch bank account.
The inspectors then bought a $1 “Yes” share on Rob Jetten in the “Next Prime Minister of the Netherlands” market. The order also noted that the site offered a Dutch-language AI chatbot.
Polymarket says it switched on IP blocking for Dutch users on Feb. 18. However, the deadline had passed the day before.
Because of this, the regulator ruled that €420,000 had been forfeited. It moved to collect the penalty in May.
Regulator Rejects Polymarket’s Objection
Polymarket filed an objection to the decision. The company said users trade positions with each other through an open-source protocol on the Polygon blockchain.
It added that there is no house and that outcomes are settled by an automated oracle. Polymarket also pointed to the Commodity Futures Trading Commission’s oversight of similar platforms in the United States.
The KSA rejected the objection on June 23. In its decision, it noted that people were betting on the next pope in 16th-century Italy.
The regulator also quoted Polymarket’s own help center. That page describes the platform as a way to “profit from your knowledge by betting on future events.”
The KSA said Dutch law bars betting on non-sports events, even for licensed operators. Licensed operators also cannot accept crypto, because anonymous payment methods are banned.
Gambling lawyer Micha Schimmel told the Financieele Dagblad that he gives Polymarket’s case little chance. He cited a 2015 ruling that found a service can be a financial product and still count as gambling.
Calling the contracts derivatives also carries risk in Europe. The EU’s markets watchdog has warned that event contracts meeting the definition of financial instruments fall under existing limits on binary options for retail investors.
The Netherlands is one of several countries treating Polymarket as unlicensed gambling. The KSA’s decision names Argentina, Australia, Belgium, Brazil, France, Hungary, Japan, Poland, Portugal and Spain.
Spain’s gambling regulator opened sanctioning proceedings against Polymarket and Kalshi in May.
The KSA has also warned that a revenue-based fine for the illegal offering could still follow. For now, Polymarket’s challenge to the ban is before a Dutch court.
