The Kansspelautoriteit (KSA), the Dutch gambling authority, has upheld an earlier ruling against Adventure One QSS Inc, the operator of the prediction market platform Polymarket. This decision follows an appeal to lift a sanction that had been imposed for offering illegal gambling services in the Netherlands.
In January, the KSA determined that Polymarket's platform allowed Dutch users to "compete for prizes or rewards" based on bets placed on future events, thus falling under the legal definition of gambling as outlined in Dutch law. This classification includes both "event betting," which covers wagers on political outcomes, and traditional sports betting, all of which require a valid license to operate.
On June 23, the KSA reaffirmed its previous ruling, indicating that Adventure One would face financial penalties unless it ceased operations in the Netherlands. Although the KSA initially granted a four-week grace period for compliance, Adventure One failed to meet the compliance deadline of February 17, only implementing IP-blocking measures a day later. Consequently, penalties began to accrue.
Adventure One submitted its appeal in March, contesting the KSA's position by asserting that its platform functions as an interface for an open-source blockchain protocol, specifically Polygon. The appeal argued that users engage in peer-to-peer trading using crypto wallets, with outcomes validated by an external oracle. Additionally, Adventure One posited that certain contracts offered on Polymarket might be categorized as financial products, a view recently supported by the EU’s financial regulator, ESMA, which stated that specific contracts could be subject to existing binary options regulations.
Despite these assertions, the KSA rejected the operator’s defense, emphasizing that the presence of chance in the platform's operations indicated it offered gambling services. The agency stressed that the use of blockchain technology or decentralized systems does not exempt the operator from compliance with Dutch gambling laws.
Furthermore, the KSA pointed out references to "betting" in Polymarket’s promotional content, which included the tagline: "Stay informed and profit from your knowledge by betting on future events." Under Dutch laws, wagering on political events and similar types of contracts is expressly prohibited.
During its investigation, the KSA found several indications that Polymarket was accessible to Dutch users, such as the ability for users with Dutch IP addresses to register and a customer service chat feature in the Dutch language. Players were also found to be able to place bets on markets relevant to Dutch politics and sports figures.
Adventure One's legal challenges to the sanction, including claims of disproportionate punishment and inadequate justification, were dismissed by the KSA. The authority affirmed that it effectively communicated the legal foundations of its order and considered submissions before making its determinations. The regulator also stood by the decision to publicly disclose the remedial order under the Dutch Open Government Act, countering claims of unfairness and “naming and shaming” by asserting the necessity of transparency for consumer protection and regulatory enforcement.
