The Netherlands Gambling Authority (Ksa) has imposed a penalty order on Adventure One QSS Inc., the operator of prediction market platform Polymarket, for offering what it called illegal gambling services in the country without a license. It marks the latest legal setback for the company as regulators worldwide intensify scrutiny of the sector.

In a statement published Tuesday, the Ksa said it had ordered Polymarket to immediately cease offering services to Dutch users. If the company fails to comply, it will be fined €420,000 ($462,000) per week, up to a maximum of €840,000 ($924,000).

“Prediction markets are on the rise, including in the Netherlands,” said Ella Seijsener, director of licensing and supervision at the Ksa. “These types of companies offer bets that are not permitted in our market under any circumstances, not even by license holders.”

Citing the “social risks” of prediction market offerings, “for example, the potential influence on elections,” Seijsener said that the platform “constitutes illegal gambling.” She added that, “Anyone without a Ksa license has no business in our market. This also applies to these new gambling platforms.”

Prediction markets around the world

The enforcement action comes amid a sharp rise in the popularity of prediction markets globally. Platforms such as Polymarket and its main competitor Kalshi have seen explosive growth over the past two years, particularly around major political events such as the 2024 U.S. presidential election. Combined monthly trading volumes on leading platforms exceed $13.5 billion, with more than 43 million transactions processed, according to a November 2025 report by Dune and Keyrock.

The controversy surrounding the sector centers on a core dispute where prediction market operators insist they are not gambling platforms, while regulators in multiple jurisdictions argue that allowing users to stake money on uncertain real-world outcomes amounts to betting. As these markets expand into politics, sports and macroeconomic events, authorities are increasingly questioning whether they fall within existing gambling laws.

The regulatory headwinds have not slowed Polymarket’s commercial ambitions. On Wednesday, the company announced a partnership with Substack that will allow authors on the publishing platform to integrate live data from Polymarket into their newsletters, saying that “journalism is better when it’s backed by live markets.” It also scored a partnership with Major League Soccer at the end of January, while rival Kalshi has struck deals with both CNBC and CNN.

Polymarket did not respond to a request to comment.

Polymarket and Kalshi have repeatedly argued that their products are structured as financial instruments rather than wagers. Kalshi CEO Tarek Mansour said last April that the company offers “event contracts,” not bets, describing the platform as “an open financial marketplace” where users trade against each other rather than against a bookmaker.

“If we are gambling, then I think you’re basically calling the entire financial market gambling,” he said at the time.

Regulatory headwinds

Despite those claims, prediction market companies are facing mounting legal pressure. Kalshi is currently defending a class action lawsuit in the Southern District of New York alleging it operates as an “illegal and unlicensed sports book.” Polymarket and other platforms have encountered legal or regulatory challenges in U.S. states, the UK, France, Germany, Italy, Australia, Singapore, Portugal, Hungary, Thailand and now the Netherlands, among others.

Dozens of lawsuits are ongoing against prediction markets in the U.S. alone from federal authorities, Native American tribes, investors who have lost money and gambling regulators.

Jan Scheele, board member at the Blockchain Netherlands Foundation, said the Dutch action is consistent with the country’s traditionally strict regulatory posture. “This would not be considered unusual in the Dutch context,” he said, adding that the Netherlands has “a reputation for applying relatively strict standards when it comes to licensing requirements and regulatory compliance, including in emerging sectors such as crypto and digital assets.”

Authorities generally expect companies to secure the appropriate permissions before offering services to Dutch users and to demonstrate ongoing compliance with consumer protection and anti-money laundering rules, he added.

Dutch regulators tend to adopt a proactive enforcement stance where they believe companies are operating without authorization or in breach of legal obligations, Scheele said. “It reflects a regulatory culture that prioritises consumer protection and systemic integrity over a more permissive, innovation-first approach.”

From a regulatory standpoint, he added, authorities typically focus on what a product enables users to do rather than how it is labeled. If users can stake value on uncertain real-world events and receive a financial return if they are correct, that can resemble a bet in economic and behavioral terms, even if the interface resembles a trading platform and transactions are settled via crypto-assets.

At the same time, Scheele noted that some prediction markets may serve informational purposes by aggregating dispersed knowledge and signaling expectations about future developments. In theory, such markets could support decision-making or risk management beyond entertainment wagering. However, under current Dutch law, the potential informational benefits do not override licensing requirements if the activity qualifies as gambling.