Legal Battles Ramp Up For Prediction Markets Around The World
Amid a period of high growth, prediction markets are attracting greater regulatory scrutiny worldwide. This week, the Netherlands, New Zealand, and many US states have all fought back against platforms, primarily Polymarket and Kalshi.
In Nevada, the state has filed a lawsuit against Kalshi, ramping up its efforts to banish the operator from the state.
Nevada has successfully driven out Polymarket and Crypto.com already, but Kalshi has stubbornly refused to withdraw from any states. FanDuel and DraftKings also gave up their sports betting licenses in Nevada to launch their prediction market platforms.
The battle between the state and Kalshi has been active since the Nevada Gaming Control Board issued Kalshi a cease-and-desist order last year.
There have been several back-and-forths this week, but there remains no clear conclusion to the case as yet. Gaming lawyer Andrew Kim has summarized the recent actions on X, concluding, “From a legal/jurisdictional standpoint, this is all getting extraordinarily messy.”
Kalshi and Polymarket have expanded their market offerings exponentially over the past year, including the ability to trade on all major esports events.
Polymarket Faces Fines In the Netherlands
In the Netherlands, it is Polymarket’s political markets that are attracting attention. The country’s gambling regulator, Kansspelautoriteit (KSA), ordered Polymarket to stop allowing users in the country to access its platform. If the company fails to comply, the KSA says it will issue fines of almost $500,000 per week.
Ella Seijsener, director of licensing and supervision at the agency, said, “Prediction markets are on the rise, including in the Netherlands. These types of companies offer bets that are not permitted in our market under any circumstances, not even by license holders.”
Over $100 million was traded on several markets related to the Dutch election on Polymarket.
The new Prime Minister, Rob Jetten, has vowed to take a tough stance on illegal gambling, and KSA says this includes prediction markets.
New Zealand Declares Kalshi and Polymarket Illegal
Meanwhile, in New Zealand, Department of Internal Affairs gambling director Vicki Scott has also declared Kalshi and Polymarket as unlicensed gambling companies.
She stated, “We consider platforms such as Kalshi and Polymarket to be gambling under New Zealand law.
“Since they aren’t authorised operators, they are prohibited from offering their gambling products to people in this country.
“To the extent these platforms are taking bets from New Zealand customers, they are breaching the law here and can expect to hear from us.”
Polymarket currently lists 33 countries that are restricted from accessing its platform. These do not include the Netherlands or New Zealand.
Polymarket Bypasses Blocks in Australia and China
Even in areas where the platform is explicitly banned, users often find ways to access it. Rather than enforcing restrictions, Polymarket has been accused of encouraging residents in prohibited zones to trade on its app.
In Australia, which is listed as a restricted territory, the country’s gambling regulator said the company was using social media influencers to appeal to Australians.
It has also been targeting Chinese users. The head of the company’s go-to-market strategy in China, Justin Yang, said he was leading a team of Mandarin-speaking team members to increase the platform’s presence in the country. That is despite China blocking Polymarket as part of its notorious Great Firewall.
Yang said his team would support Chinese market makers, develop a Chinese-language interface for the site, and monitor search trends in China to add more culturally relevant betting topics.
One user, linked to a Chinese account on X, has taken advantage of the ability to access Polymarket by generating over $100,000 in esports wagers over the past month.
The site has also created markets related to the Lunar New Year, the biggest event of the calendar year in China.
While states and countries ramp up regulatory action against Kalshi and Polymarket, the two companies show no signs of slowing down. As Kim wrote on X, “How all this shakes out, I don’t know”. As yet, there are no markets available for the future of prediction markets.
