Polymarket is taking its dispute with Dutch regulators to court, challenging a market ban and a €420,000 penalty in a case that could help determine whether prediction markets are treated as gambling platforms or financial products in the Netherlands, Yahoo Finance reported.
The US-based prediction market argues its event contracts should fall under the Dutch Authority for the Financial Markets (AFM) rather than the gambling regulator Kansspelautoriteit (KSA). The KSA takes the opposite position, saying Polymarket offered illegal games of chance without a Dutch license.
The dispute involves Adventure One QSS Inc., the operator of Polymarket, which incurred a €420,000 penalty after the KSA determined it had failed to comply with an enforcement order on time.
Enforcement Timeline
The KSA ordered Polymarket to stop serving the Dutch market earlier this year and warned of penalties of €420,000 per week, capped at €840,000.
Polymarket subsequently restricted Dutch users, but regulators determined the company had complied too late. The KSA found that Adventure One had violated the enforcement order, resulting in a €420,000 penalty that the regulator moved to collect.
Polymarket challenged the decision through the administrative objection process, but the KSA rejected its objection in June. The company is now escalating the dispute to court.
The case has drawn additional attention because of Polymarket’s role in the 2025 Dutch parliamentary election. More than $30 million was wagered on election-related markets, according to NL Times, as cited in the report.
Gambling or Financial Product?
The central dispute goes beyond the €420,000 penalty and focuses on how Dutch law should classify Polymarket’s event contracts.
Polymarket allows users to trade contracts whose value depends on whether an event occurs. The company argues this structure resembles futures and should therefore be supervised as a financial product.
The KSA interprets the same mechanism differently, arguing that users put money at risk on uncertain outcomes, making the contracts gambling under Dutch law.
Even Polymarket’s preferred classification could create another regulatory challenge. Critics argue its yes-or-no contracts resemble binary options, where traders receive a predetermined payout if an outcome occurs or lose their stake if it does not. Binary options face strict restrictions for retail investors across Europe, according to the report.
Dutch gambling lawyer Micha Schimmel said Polymarket may face a difficult case, citing earlier Dutch jurisprudence indicating that a product can have financial characteristics while still qualifying as gambling.
Wider Regulatory Fight
The Dutch case forms part of a broader dispute over how prediction markets fit into existing regulatory systems.
France and Germany have also restricted Polymarket, while regulators and courts in the US continue to confront similar questions surrounding event contracts, particularly those linked to sports.
Polymarket recently introduced voluntary deposit limits and lockouts aimed at curbing compulsive trading amid increasing legal scrutiny of prediction markets in the US.
Potential Implications
The Dutch ruling could have implications beyond the €420,000 penalty, particularly for how regulators classify prediction markets.
If Polymarket convinces the court that its contracts fall under financial market regulation, the decision could strengthen the industry’s argument that prediction markets are closer to derivatives exchanges than sportsbooks.
If the KSA prevails, the decision could reinforce the position taken by several European regulators that prediction markets can fall under gambling laws even when wagers are structured as tradable contracts.
