Polymarket has gone to court in the Netherlands to challenge a ban imposed by the Dutch gambling regulator, arguing that the contracts traded on its prediction market should be treated as financial products rather than gambling offerings.

The dispute follows an enforcement action by the Netherlands Gambling Authority, or KSA, which ordered Polymarket’s operator in January to stop serving Dutch users within four weeks or face weekly penalties. After deciding the platform’s geoblocking came too late, the regulator moved to collect €420,000.

How the Dutch action began

According to the regulator’s decision, KSA inspectors were able to open an account from a Dutch IP address, deposit €10 using a card tied to a Dutch bank account, and buy a $1 “Yes” share on Rob Jetten in a market about the next prime minister of the Netherlands. The order also noted that the site offered a Dutch-language AI chatbot.

On Jan. 20, the KSA ordered Polymarket’s operator to stop offering its service in the country within four weeks. The order set a penalty of €420,000 per week, with a maximum of €840,000, if access for Dutch users was not cut off in time.

Polymarket’s argument in court

Polymarket has confirmed that it is seeking to have the ban lifted, as first reported by Dutch financial newspaper Het Financieele Dagblad. Its core argument is a familiar one for prediction-market operators: the event contracts traded on the platform resemble derivatives or futures, which would place them under the Netherlands Authority for the Financial Markets, or AFM, rather than the gambling authority.

In its objection to the KSA, the company said users trade positions against one another through an open-source protocol on Polygon, rather than against a house. It also argued that market outcomes are resolved through an automated oracle and pointed to Commodity Futures Trading Commission oversight of comparable platforms in the United States.

Why the KSA rejected the objection

Polymarket said it enabled IP blocking on Feb. 18. The KSA concluded that the compliance deadline had expired a day earlier, meaning one weekly penalty had already been incurred. On that basis, the regulator moved in May to collect €420,000.

The KSA rejected the company’s objection on June 23. In its reasoning, the regulator cited Polymarket’s own help-center language describing the service as a place to “profit from your knowledge by betting on future events.” The authority also argued that Dutch law does not allow betting on non-sports events even for licensed operators, and added that licensed providers cannot accept crypto because anonymous payment methods are barred.

Legal headwinds beyond the Netherlands

Gambling lawyer Micha Schimmel told Het Financieele Dagblad that he sees little chance of success for Polymarket’s case, pointing to a 2015 ruling that a product can qualify as a financial instrument while still being considered gambling. He also noted a separate European risk: if event contracts meet the legal definition of financial instruments, they may still fall under existing EU restrictions on binary options for retail investors, a concern previously raised by the bloc’s markets watchdog.

The Dutch case also fits into a broader pattern of scrutiny. In its decision, the KSA listed Argentina, Australia, Belgium, Brazil, France, Hungary, Japan, Poland, Portugal and Spain among jurisdictions that treat Polymarket as unlicensed gambling. Spain’s regulator opened sanction proceedings against Polymarket and Kalshi in May.

What comes next

For now, the confirmed next step is the court challenge itself, which will test whether Polymarket’s contracts should be handled as market products or as prohibited betting under Dutch law. The KSA has already made clear that it disagrees with Polymarket’s characterization.

The regulator has also warned that the €420,000 collection effort may not be the end of the matter. It said a separate revenue-based fine for the illegal offering could still follow.

Source: news.bitcoin.com