Polymarket is challenging a Dutch court order banning its operations in the Netherlands, arguing that its prediction market contracts should be regulated as financial products rather than gambling.
The Netherlands Gambling Authority (KSA) issued an order on January 20 requiring Polymarket's operator to stop serving Dutch users within four weeks or face penalties of €420,000 ($471,000) weekly, capped at €840,000 ($943,000). The regulator found that the platform offered a Dutch-language AI chatbot and allowed account creation from Dutch IP addresses and bank accounts. KSA inspectors opened an account, deposited €10, and purchased a $1 share predicting the next Dutch prime minister.
Polymarket has now taken the case to court, according to reports from Dutch financial media. The company argues that its event contracts function as derivatives and should be overseen by the Netherlands Authority for the Financial Markets (AFM) rather than the KSA. The platform noted that users trade positions through an open-source protocol on the Polygon blockchain with no house involvement and automated settlement, pointing to comparable U.S. platforms regulated by the Commodity Futures Trading Commission.
The company enabled IP blocking on February 18, but the original deadline expired on February 17. The KSA rejected Polymarket's objection on June 23, citing Dutch law that prohibits betting on non-sports events. The regulator also quoted Polymarket's own help documentation describing the platform as a way to "profit from your knowledge by betting on future events."
Legal experts view the company's prospects as uncertain. Gambling lawyer Micha Schimmel noted that a 2015 court ruling established that a service can be classified as both a financial product and gambling simultaneously. He also warned that reframing the contracts as derivatives carries risk under European regulations, as the EU's markets watchdog has cautioned that event contracts meeting financial instrument definitions may fall under restrictions on binary options for retail investors.
The Netherlands is among a growing number of countries treating Polymarket as unlicensed gambling. The KSA's decision references actions by regulators in 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 signaled that a revenue-based fine for the illegal offering could follow.
