Dutch gambling regulator upholds Polymarket sanction
The KSA has rejected Polymarket’s appeal against its threat of fines for offering illegal gambling in the Netherlands.
The Netherlands.- The Dutch gambling regulator Kansspelautoriteit (KSA) has upheld its sanction against the prediction market platform Polymarket for offering illegal gambling services in the Netherlands. Operator Adventure One QS had lodged an appeal after being threatened with fines if it continued to cater to Dutch customers.
Back in February, the KSA ordered Polymarket to immediately cease activities in the Netherlands or risk fines of €420,000 per week up to a maximum of €840,000. The operator missed a compliance deadline of February 17 and only implemented IP-blocking measures the following day. However, it lodged an appeal in March and also requested a refund of its legal costs.
The appeal hinged on a claim that Polymarket’s offering doesn’t qualify as gambling, for which it does not have a licence in the Netherlands. Instead, Adventure One argued that its platform was merely an interface for the open-source blockchain protocol Polygon, allowing users to trade peer-to-peer positions using crypto wallets. It also argued that its product is regulated as a financial product in some cases.
However, the KSA rejected these arguments. It concluded that the element of chance made Polymarket’s offering a gambling service. It said Polymarket had provided Dutch users with “an opportunity to compete for prizes or rewards” through wagering on the outcomes of future events, thus meeting the statutory definition of gambling under Dutch law.
The involvement of blockchain technology, crypto wallets or decentralised protocols did not permit any exemption from Dutch gambling laws, it said.
The gambling regulator also noted that Polymarket’s own promotional materials appeared to contradict its defence by including the word “betting” in the line “Stay informed and profit from your knowledge by betting on future events”.
In its initial investigation, the KSA found that the platform was readily accessible and effectively aimed at Dutch users. Registration was available to users with Dutch IP addresses and customer service included a Dutch-language AI chat function. The regulator also noted that players could bet on markets specifically related to Dutch politics and sporting figures. Wagering on political events is itself prohibited under Dutch gambling legislation.
Adventure One’s arguments that the KSA’s sanction was disproportionate, legally uncertain and inadequately motivated were also rejected. The regulator affirmed that it had clearly communicated the legal basis for the order, invited and considered submissions and provided proper reasoning.
The regulator also defended its decision to make its regulatory enforcement public. Polymarket’s parent had complained that the KSA’s naming and shaming of the platform was unfair. The KSA noted that it has every right to publish its decisions under the Dutch Open Government Act, justifying the decision on the grounds of consumer protection, transparency regarding regulatory enforcement and deterrence.
Growing conflict between prediction platforms and gambling regulators in Europe
The case demonstrates that the conflicts between prediction platforms and gambling regulators so common in the US have truly arrived in Europe. Last month, nine European regulators announced a joint initiative against prediction markets, warning consumers over player protection and market integrity risks.
The German gambling regulator, the GGL, recently launched an investigation into FIFA partner ADI Predictstreet, which received a gambling licence in Gibraltar earlier this year.
Meanwhile, The European Securities and Markets Authority (ESMA) has cautioned that some prediction products could be deemed restricted financial instruments in the European Union (EU). It affirmed that prediction markets structured as yes-or-no contracts with fixed payouts may fall under prohibitions on the marketing and sale of binary options to retail customers.
