American prediction market platform Polymarket is set to challenge in court a ban imposed on its operations in the Netherlands, arguing that it should be treated as a financial platform rather than a gambling service.
The company disclosed its plans to Financieele Dagblad, maintaining that its activities should fall under the supervision of the Dutch Authority for Financial Markets (AFM), rather than the Dutch Gambling Authority (Ksa).
The dispute began in February when the Ksa ruled that Polymarket was operating as an unlicensed gambling platform in the Netherlands. The regulator ordered the company to stop its activities in the country and imposed a €420,000 fine. Access to the US-based platform was also blocked.
Polymarket has rejected the regulator’s classification and is now preparing to contest the decision through the courts.
The platform allows users to trade contracts whose value depends on whether a particular event occurs. Polymarket argues that this model is closer to financial products such as futures contracts, in which investors speculate on future market outcomes, than traditional gambling.
However, critics cited by FD dispute that argument, saying the platform’s products could instead be considered binary options.
Binary options involve predicting one of two possible outcomes, with users either receiving a predetermined payout if their prediction is correct or losing their entire stake. Such products are already prohibited in many European countries.
Polymarket has become increasingly popular for contracts tied to cryptocurrency markets, political developments and major global events.
Ahead of the Dutch parliamentary election in November last year, users reportedly placed more than $30m in bets on Polymarket regarding whether political parties would gain or lose seats in the Tweede Kamer.
The platform also offers contracts based on developments in international conflicts, allowing users to speculate on the likelihood of various outcomes.
Polymarket’s court challenge will therefore centre on whether its prediction contracts should be regulated as financial products or treated as gambling activities under Dutch law.
