€840K Fine Threat: Netherlands Declares Polymarket Illegal Gambling After $32M Election Bets

Dutch users wagered more than $32 million on the October 2025 parliamentary elections through Polymarket — a platform that holds no gambling license in the Netherlands. On January 20, 2026, the Kansspelautoriteit (KSA), the country’s gambling regulator, issued a penalty order against Polymarket’s operator, Adventure One QSS Inc., threatening fines of €420,000 per week — capped at €840,000 — unless the platform ceases all Dutch operations. The decision, published February 17, marks the most detailed regulatory dismantling of Polymarket’s “we’re not gambling” defense to date.

The ruling forces a question prediction markets have been dodging across a dozen jurisdictions: if users stake money on uncertain outcomes for profit, does the mechanism behind the odds actually matter?

What Happened

The timeline begins with the Netherlands’ October 2025 parliamentary elections — an event that generated significant betting activity on Polymarket’s platform. Dutch-specific markets included contracts on who would become the next Prime Minister (over $16 million in global volume), coalition formation outcomes ($58.8 million), and party-specific bets on PVV ($10 million+) and D66 (~$6 million). The KSA estimates that Dutch users accounted for $32 million or more of this volume.

The regulator launched an investigation into whether Polymarket was operating as an unlicensed gambling provider under the Dutch Gambling Act. KSA investigators created accounts from Dutch IP addresses, deposited funds using Dutch-issued Mastercard payments in euros, placed bets on the election markets, and successfully withdrew winnings — completing the full cycle without encountering any geographic restriction.

On January 20, 2026, the KSA issued its formal penalty order against Adventure One QSS Inc., Polymarket’s corporate entity. The decision was published on February 17, giving the platform a compliance window. By late February, Dutch users report being blocked from Polymarket, though the Netherlands still does not appear on Polymarket’s official list of geo-restricted countries. Polymarket has not issued a public statement on the Dutch action.

The platform’s silence contrasts with its activity elsewhere. Around the same time the Dutch ban was published, Polymarket announced a partnership with Substack to embed live market data in newsletters — a move that signals continued expansion even as regulatory pressure mounts across Europe. For context on Polymarket’s broader regulatory history, including its $1.4 million CFTC settlement and subsequent US relaunch strategy, the pattern of expansion-then-enforcement has become a defining feature of the platform’s growth.

Why the KSA Says It’s Gambling

The KSA’s legal reasoning centers on Article 1(1)(a) of the Dutch Gambling Act (Wet op de kansspelen), which defines a game of chance as any opportunity offered to the public to compete for prizes where participants generally cannot influence the outcome. The regulator concluded that Polymarket’s binary outcome contracts — “Will X happen by Y date?” — meet this definition regardless of the underlying mechanism.

The evidence of targeting Dutch users was extensive. KSA investigators documented six distinct indicators that Polymarket was actively serving the Dutch market:

The KSA also estimated approximately 50,000 Dutch searches for “Polymarket” in December 2025, suggesting substantial domestic interest. Taken together, the regulator argued, Polymarket did not passively receive Dutch traffic — it actively facilitated Dutch participation by failing to implement any meaningful exclusion measures.

“These types of companies offer bets that are not permitted in our market under any circumstances, not even by license holders.”
— Ella Seijsener, Director of Licensing & Supervision, KSA

Seijsener’s statement is significant because it closes a potential loophole. Polymarket cannot resolve the Dutch issue by applying for a license — event betting on elections is categorically prohibited under Dutch gambling law, even for licensed operators. The KSA further cited “social risks” associated with election betting, including the “potential influence on elections” — a concern that elevates the issue beyond consumer protection into democratic integrity territory.

Polymarket’s Defense — and Why It Failed

Polymarket’s response to the KSA leaned on its standard argument: it operates a “prediction market where users trade positions with each other,” not a gambling service. The platform argued that “pricing and settlement come from market dynamics and protocol contract logic, not from a chance mechanism designed by the operator.” In other words, because Polymarket doesn’t set odds or act as the house, it shouldn’t be classified as a gambling provider.

The KSA rejected this distinction entirely. Under Dutch law, what matters is whether participants stake money on uncertain outcomes for potential profit — not the technical architecture that determines the payout. Whether odds are set by a bookmaker or emerge from peer-to-peer trading is legally irrelevant. A bet is a bet.

This mirrors the argument Kalshi CEO Tarek Mansour has made from the other side of the debate. “If we are gambling, then I think you’re basically calling the entire financial market gambling,” Mansour told reporters, drawing a parallel between prediction market contracts and commodities futures. The comparison is not frivolous — both involve staking capital on future events — but regulators in the Netherlands (and elsewhere) have consistently held that the distinction lies in the nature of the underlying event, not the financial instrument used to trade it. A contract on wheat prices serves a hedging function. A contract on who becomes the next Dutch Prime Minister does not.

The failure of the “market mechanism” defense in the Netherlands has implications beyond one jurisdiction. The same argument is Polymarket’s primary shield in every country where it faces regulatory scrutiny. If it cannot survive the KSA’s analysis — which is among the most detailed public rulings on prediction markets to date — its viability as a defense elsewhere is weakened. This is the same platform now facing criminal insider trading charges in Israel over military intelligence-based bets, where the “market dynamics” framing offers no protection against national security concerns.

The Election Betting Numbers

The Dutch election markets reveal just how much money flowed through Polymarket on a single country’s political events. The October 2025 parliamentary elections generated concentrated activity across several contracts.

The $32 million figure is the KSA’s estimate of Dutch-origin volume, not global volume on Dutch markets. The distinction matters: international users also bet on Dutch elections, meaning Polymarket’s total exposure to Dutch political events was substantially higher. The Next PM market alone saw $4 million concentrated on Rob Jetten, who eventually became Prime Minister — the kind of informed, high-conviction bet that regulators argue looks indistinguishable from gambling regardless of the platform’s technical architecture.

The KSA specifically flagged the “social risks” of election betting. When real money is staked on political outcomes, the regulator argued, it creates perverse incentives: voters might bet against their preferred candidate as a hedge, parties might attempt to manipulate markets for signaling purposes, and the existence of large public bets on election outcomes could influence voter behavior. These concerns echo debates playing out in the United States, where the NFL banned prediction market advertising during the Super Bowl partly over concerns about event integrity when money is on the line.

The Global Regulatory Pattern

The Netherlands is not an outlier. It is the latest entry in a growing list of jurisdictions that have taken enforcement action against Polymarket. What began as a single CFTC case in the United States has expanded into a multi-continent regulatory campaign, with each country arriving at roughly the same conclusion through different legal frameworks.

Belgium’s approach is the most aggressive in Europe so far — ISP-level blocking means Belgian users cannot even access Polymarket’s website without a VPN. The KSA’s approach is financial rather than technical: penalty orders target the corporate entity directly, creating ongoing liability that accumulates weekly. France and Germany are working through their respective regulatory frameworks but have not yet issued formal orders.

The U.S. situation remains the most consequential and the most uncertain. The CFTC fined Polymarket $1.4 million in 2022 and ordered it to cease serving U.S. users. The platform complied, then structured a US relaunch through regulatory channels. Under the current Trump administration, CFTC enforcement has paused, and Polymarket has been positioning itself for a return to the American market. The broader prediction market industry’s explosive growth — now a $20 billion-plus sector — makes the regulatory stakes vastly higher than in 2022.

What This Means for Prediction Markets

The Netherlands ruling arrives at a pivotal moment for prediction markets as an industry. Combined monthly trading volume across platforms exceeded $13.5 billion in November 2025. A single-day volume record of $701.7 million was set in January 2026. Polymarket alone processes billions per month. The gap between the industry’s scale and its regulatory status has never been wider.

The core tension is philosophical, and the KSA ruling crystallizes it. Prediction market operators argue they provide an information aggregation service — a mechanism for crowdsourcing probabilities about future events. The Kalshi CEO’s comparison to financial markets is not random: if prediction contracts are financial instruments, they fall under financial regulation (which is generally lighter than gambling regulation and permits the underlying activity). If they are gambling, they fall under gambling law — and in most jurisdictions, offering gambling without a license is a criminal offense, not just a regulatory violation.

The KSA’s ruling is notable for how thoroughly it dismisses the “financial instrument” framing. The regulator did not engage with the question of whether prediction markets produce useful information (they arguably do). It focused solely on the participant experience: Dutch users staked money on uncertain outcomes, hoping for a payout. That is gambling under Dutch law. Full stop.

This matters because the same logic applies across the EU. Gambling regulation in Europe is handled at the national level, but the legal definitions are broadly similar. If the KSA’s analysis — which is one of the most detailed public rulings on prediction market classification — holds up, it provides a template that other European regulators can adopt with minimal modification. The prediction market settlement disputes and competitive dynamics of the broader market only add pressure. As more platforms launch and more money flows in, regulators face increasing urgency to establish clear rules.

The question for Polymarket specifically is whether its growth can outrun its regulatory exposure. The platform is simultaneously expanding — the Substack partnership, potential US relaunch, record volume numbers — while accumulating enforcement actions across an increasing number of countries. Revenue-based fines in the Netherlands could follow the initial penalty. Belgium has already blocked access entirely. France and Germany are likely to follow the Dutch template. Each action narrows the addressable market and increases compliance costs, even as the platform’s user base continues to grow globally.

For the broader gambling regulatory landscape, the Dutch decision sets a precedent. Prediction markets will be treated as gambling until they can demonstrate otherwise through a legal framework that doesn’t yet exist in most jurisdictions. The “we’re not gambling, we’re information markets” defense — Polymarket’s primary shield — has now been formally rejected by a major European regulator with a detailed, published legal analysis. Other regulators will read it.