Dutch Kansspelautoriteit (KSA) Moves to Shut Down Polymarket: Why “Prediction markets” Now Look Like Unlicensed Gambling in the EU

The Dutch gambling regulator KSA has ordered Polymarket’s operator to stop offering its crypto-based prediction markets to people in the Netherlands, backed by weekly penalty payments that can reach €840,000. The case matters far beyond the Dutch market: it’s a template for EU regulators to treat “event contracts” as illegal remote gambling unless licensed locally—regardless of whether the product is framed as “trading.”

Key Points

• The KSA imposed a “last onder dwangsom” (order under penalty) on Polymarket operator Adventure One QSS Inc., demanding it stop offering unlicensed games of chance to Dutch residents; €420,000 per week, max €840,000.
• In its published decision, the KSA says Dutch residents could create an account, deposit, and participate without effective technical barriers (geo-blocking), following investigations in July and November 2025.
• Polymarket argued it is not gambling but a “market” where users trade positions and outcomes reflect information and market dynamics; the KSA rejected this and treated it as a Wok-prohibited offering without a Dutch licence.
• The UK has now publicly clarified that prediction markets offered in Great Britain would be treated as gambling products (and require appropriate licensing).
• In the US, the regulatory story is split: the Commodity Futures Trading Commission (CFTC) previously sanctioned Polymarket for offering event-based binary options/swaps via an unregistered facility (a 2022 order with a $1.4m penalty and wind-down requirements).

Short Narrative

The KSA’s message is blunt: if Dutch users can access the platform and stake money-like value on uncertain events, it is remote gambling—licence required. The regulator’s decision frames Polymarket as providing “opportunity to participate” in a game of chance without authorisation under Dutch law, and it backs the stop order with meaningful weekly penalties.

This is also not just about consumer protection boilerplate. Dutch public debate has focused on politically sensitive markets (elections, coalition formation) and the risk that such markets can incentivize manipulation, insider behaviour, or public distrust—especially where crypto rails and pseudonymity complicate supervision.

Extended Analysis

1) How Prediction Markets Work (and why regulators don’t buy the “it’s just trading” defence)

Most prediction markets list “Yes/No” contracts on an event (e.g., “Candidate X wins”). A contract price (say, 0.63) is marketed as an implied probability (63%). Users can buy/sell positions before settlement; at resolution, a winning share pays out and a losing share goes to zero (or close), with settlement often relying on an oracle or defined data source.

From a compliance lens, the functional test is simple: stake → chance/uncertainty → payout. Whether the UI says “trade” or “bet,” and whether pricing is formed by an order book or an AMM, regulators frequently classify the product as gambling (EU/UK) or as a derivative (US)—either way, it triggers licensing/authorisation. The KSA decision explicitly records Polymarket’s argument that outcomes are not “pure chance” because informed traders can act; it still treats the offering as a prohibited, unlicensed game of chance under Dutch law.

2) Why the KSA Banned Polymarket

The published Dutch decision matters because it reads like an enforcement checklist for any cross-border prediction market:

• Market access from the Netherlands: the KSA’s investigators could register and participate from Dutch IP space; no effective blocking measures were in place.
• No Dutch remote-gambling licence: the operator was not authorised for online gambling in the Netherlands.
• Enforcement posture: the KSA justifies penalties by pointing to core objectives: consumer protection, addiction prevention, fraud/crime prevention, and safe payments—classic gambling-supervision pillars.

In other words: this is not a nuanced “MiCA vs MiFID” debate. The KSA is treating the product as gambling first, crypto second.

3) US vs UK: Two Different Legal Boxes, Same Compliance Outcome

• United States: The CFTC has already acted against Polymarket’s earlier structure, treating its event-based binary options as “swaps” and sanctioning the platform for operating an unregistered facility / non-designated contract market (with a $1.4m penalty and wind-down obligations).
  Meanwhile, the US environment remains contested, with ongoing clashes between federal derivatives framing and state-level gambling enforcement narratives around event contracts.
• United Kingdom: The Gambling Commission has now set out that prediction markets, if offered in Great Britain, sit within existing gambling law and would need the appropriate permissions—pushing the model toward a “betting exchange” compliance posture rather than a “financial markets” one.

4) What this means for the EU

The EU has no single “prediction market” passport. Gambling is largely regulated at member-state level, and the KSA action signals where enforcement is heading: availability + participation = local licensing exposure.

Practical consequences for prediction markets operating (or marketed) into the EU:

1. Geo-fencing becomes non-optional: regulators will test access, onboarding, deposits, and UX “market targeting” factors (language, local events, local marketing). The KSA’s investigation narrative shows exactly how.
2. Crypto rails don’t reduce licensing risk—often the opposite: they raise AML/consumer-protection concerns and make “we’re not targeting you” arguments weaker when access is frictionless.
3. EU expansion strategy shifts to regulated betting-exchange models: in practice, the UK’s position suggests the compliance route is gambling licensing (where available) rather than trying to free-ride on “financial product” narratives.
4. Expect copycat enforcement across the EU: public reporting already notes blocking/illegality debates in neighbouring jurisdictions; the Dutch order adds a fresh, exportable enforcement pattern.

Actionable Insight

If you operate (or invest in) a prediction market touching the EU: treat the KSA decision as a regulatory routing signal. Your core risk is not “token compliance”—it’s unlicensed gambling distribution, with enforcement triggered by mere accessibility. The minimum viable compliance posture now looks like: hard geo-blocking, EU-market abstention by default, and a jurisdiction-by-jurisdiction licensing strategy (or a pivot into fully regulated betting exchange frameworks).

Call for Information

Have you used Polymarket (or similar prediction markets) from within the EU—especially the Netherlands—or seen payment facilitators, wallet rails, “localisation” tactics, or influencer campaigns aimed at EU users? Send evidence (screenshots, transaction trails, affiliate links, domain clones, onboarding flows) via Whistle42.com. Insiders at operators, PSPs, or marketing affiliates: we also want to hear how geo-blocking and market targeting decisions are made.