On the 20th, the Dutch gaming regulator KSA issued a penalty order against Adventure One QSS, the operator of Polymarket, finding that it was providing "illegal gambling services" to Dutch users without obtaining a local gaming license, and ordered it to cease all business operations in the Netherlands within four weeks.
If you do not comply, the fine is €420,000 per week (approximately US$462,000), with a cumulative maximum of €840,000.
KSA Director Ella Seijsener stated, "Bets offered by these companies are not permitted in our market under any circumstances." The regulator also specifically highlighted the social risks, particularly the potential influence of prediction markets on elections.
A fundamental question: Is market prediction gambling or a financial instrument?
Polymarket and its competitor Kalshi have consistently maintained that prediction markets are not gambling, but rather "financial instruments." Users purchase "event contracts," which are essentially binary options on the outcome of specific events. These contracts are traded between users, and the platform itself is not the house. This is fundamentally different in structure from placing a bet on a fixed odds on a gambling website.
However, Dutch law sees it differently. According to Section 1(1)(a) of the Dutch Gambling Act, any act of "betting money on uncertain events in order to win a prize" constitutes gambling, regardless of whether you call it a prediction market, event contract, or information discovery tool; the name does not affect the legal characterization.
This legal logic may seem crude at first glance, but it touches on a question that proponents of prediction markets are reluctant to answer directly: If a retail investor bets $100 on whether "Trump will step down before 2028," what is the essential difference between his behavior and betting on the same event on a gambling website?
The answer may be different contract structures, different price discovery functions, or different market efficiencies, but for a retail investor who loses $100, the result is exactly the same.
Europe's Regulatory Iron Curtain: From Individual Cases to Trends
The Netherlands is not the first. France, Italy, Belgium, and Romania have already blocked access to Polymarket. Germany, the UK, Portugal, and Hungary are also facing similar regulatory pressure.
There is a structural reason behind this: the regulatory power over gambling in EU member states is highly decentralized, with each country enforcing the law independently according to its own national laws. The trend suggests that Europe's attitude towards prediction markets is tightening, not loosening.
The reasons are consistent: unlicensed, influencing elections, protecting consumers, and the market's space for prediction is being squeezed country by country in Europe.
A Mirror Image Across the Atlantic: The Trump Administration's Full Support
However, in stark contrast to the European ban, the US federal government is giving the green light to forecasting markets.
Michael Selig, who will take office as CFTC chairman in December 2025, has made his stance clear. In an article published in The Wall Street Journal, he declared: "The CFTC will no longer stand idly by and watch overzealous state governments undermine the agency's exclusive jurisdiction."
He said this because at least 50 lawsuits are currently underway in the United States concerning prediction markets. The Nevada Gaming Regulatory Commission has obtained a temporary restraining order against Kalshi, and New Jersey, Maryland, Tennessee, and other states have also issued cease-operation notices. Republican Utah Governor Spencer Cox directly retorted to the CFTC: "The prediction markets you're so desperately defending are gambling, pure gambling."
The CFTC's legal argument is that prediction market contracts are essentially commodity futures, falling under federal jurisdiction, and states have no right to intervene under gambling laws. In May 2025, the CFTC withdrew its appeal against the Kalshi election market ban; in September, it issued a letter of inaction to Polymarket exempting it from some reporting and record-keeping obligations; and in December, it approved the regulatory pathways for Polymarket and Gemini.
Polymarket is also actively expanding into the US market, having acquired the licensed derivatives exchange QCX for $112 million, paving the way for its formal return to the US.
The end of regulatory arbitrage
Polymarket's story illustrates a recurring pattern in the crypto industry: using technological innovation to circumvent regulatory boundaries until those boundaries catch up.
In Europe, prediction markets are classified as gambling and face a complete ban. At the US federal level, they are classified as financial instruments and enjoy regulatory protection. At the state level, they are again classified as gambling and face state-by-state lawsuits. The same product, three different classifications, three different fates.
This regulatory arbitrage strategy (operating in the most favorable jurisdictions while being open to users worldwide) is effective in the short term, as evidenced by Polymarket's explosive popularity during the 2024 US presidential election.
But as more and more countries begin to actively enforce the law, the technological defenses of geographical blockade become a paper wall that can be punctured at any time.
Note: Dutch regulatory officials logged into Polymarket using a Dutch IP address, successfully created an account, deposited €10 via a Dutch bank card, and placed bets in the political market, including contracts related to the Dutch elections. In other words, Polymarket's geo-blocking was ineffective.
For Polymarket, globalization is both its strength and its weakness: it needs to win the qualitative battle in every market, while regulators only need to win once on their own turf.
