New Zealand regulator rules Polymarket and Kalshi are illegal
New Zealand’s Department of Internal Affairs has ruled that prediction market platforms Polymarket and Kalshi are illegal under the country’s gambling laws.
Prediction markets let users place bets on future events ranging from sporting events to political developments and monetary policy decisions, and have been growing in popularity in recent months, with some even partnering with news agencies like CNN in the US.
“We consider platforms such as Kalshi and Polymarket to be gambling under New Zealand law,” Vicki Scott, Gambling Director of the Department of Internal Affairs, told Newsroom. “Since they aren’t authorized operators, they are prohibited from offering their gambling products to people in this country.”
The regulator has not notified either company, and New Zealand is not listed among restricted jurisdictions on Polymarket’s website, but Scott confirmed that notification letters would be issued to the two for clarity.
New Zealand law only allows sports wagering through TAB New Zealand, which holds a monopoly after Entain’s takeover of its day-to-day operations. The country is soon to welcome its own regulated igaming market, which will be regulated under legislation introducing 15 licensed operators.
The Financial Markets Authority added that some prediction market products could potentially meet the definition of a derivative under the Financial Markets Conduct Act, but confirmed that this may not exempt them from the country’s Gambling Act.
Australia’s gambling regulator also ruled this month that the platforms are classified as gambling.
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
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The Backstory
Why New Zealand moved now
New Zealand’s Department of Internal Affairs is drawing a firmer line on event betting just as prediction markets race for mainstream legitimacy. The ruling that platforms such as Polymarket and Kalshi are illegal under the country’s gambling laws follows months of scrutiny over whether crypto-backed and exchange-style markets are financial instruments or wagers. The trigger for clarity came as the platforms expanded globally and notched high-profile content tie-ups overseas, which intensified questions about who polices what — and where.
The department has paired the policy stance with active enforcement in adjacent corners of the market. In Christchurch District Court, the owner of a large online lottery pleaded guilty to illegal gambling and profiting from unlawful gambling, a case officials billed as a first-of-its-kind prosecution. That action, detailed in our report on New Zealand’s ilottery guilty plea, underscores how regulators are applying the country’s Gambling Act to digital operators as they scale. Vicki Scott, the department’s gambling director, told 1News the prosecution “clearly signals our lack of tolerance” for evasion of controls designed to keep gambling “fair, well-run and responsible.” That sentiment tracked with the agency’s stance on prediction markets and aligns with the broader effort to prepare a regulated igaming framework expected to launch in late 2026.
The compliance stakes are rising. New Zealand limits sports wagering to Tab New Zealand’s monopoly, and regulators have indicated that event-betting platforms offering markets to locals without authorization face prohibition. While notification letters are still to be issued, the department has already set out its interpretation publicly, including in a report by Newsroom that the platforms amount to gambling under domestic law. For context on that initial signal, see Newsroom’s account of the DIA position.
Regional echoes from Australia
New Zealand’s stance lands in a regional environment already shifting against prediction markets. Australia’s federal regulator classified such platforms as illegal gambling and directed internet providers to block access, following an investigation into Polymarket’s crypto-denominated markets on sports, elections and macro events. Our coverage, Australian regulator rules prediction markets are gambling, details how the Australian Communications and Media Authority rejected Polymarket’s claim that it offers a financial product, concluding instead that users were engaged in interactive gambling as defined by law.
The decision carried teeth: Polymarket was added to the national list of blocked sites in August, prompting the company to curtail Australian access. Documents obtained by Crikey through a freedom of information process indicated the regulator tallied roughly 1.88 million Australian visits to the platform over several months before the block. For the investigative backdrop, see Crikey’s reporting on ACMA’s determination. New Zealand’s action does not copy Australia’s playbook, but both reflect a common conclusion: event-outcome markets look like gambling when assessed under national statutes, regardless of platform branding or payment rails.
U.S. legal crosswinds shape the narrative
The gray area that Polymarket and Kalshi inhabit — between finance and gambling — is most visible in the United States, where state and federal authorities have split over jurisdiction. Kalshi, which pitches its contracts as federally regulated event futures, has tested that thesis in court and repeatedly hit resistance at the state level.
In Maryland, a federal judge declined to block state gaming regulators from acting against Kalshi for offering sports markets without a license, finding the company fell short of showing it would likely prevail on its claim that federal approval supersedes state gambling law. Read more in our story, federal district court rules against Kalshi in Maryland. In Nevada, a separate federal case went further: Judge Andrew Gordon ruled that event contracts tied to sports — including timing of football touchdowns — are not swaps and therefore not under the Commodity Futures Trading Commission’s exclusive jurisdiction, clearing state regulators to enforce. The decision, analyzed in federal judge rules against Kalshi in Nevada, lifted an earlier injunction and heightened criminal and civil exposure for unlicensed operations in the nation’s most influential gaming jurisdiction.
Kalshi is simultaneously pressing a federal lawsuit in New York that argues the CFTC has exclusive authority over its event contracts and that state oversight interferes with federal regulation. That complaint, filed as the company announced a multi-year data and rights partnership with the NHL, is detailed in Kalshi sues New York regulators over event contracts rules. The push-pull across states — with New Jersey, Nevada and Maryland each challenging Kalshi’s model — has created a patchwork that operators must navigate market by market.
The fault line: finance or gambling
The core dispute is definitional. Platforms frame binary contracts on elections, policy rates or game outcomes as tradable instruments akin to derivatives, emphasizing market-making, spreads and hedging. Gambling regulators, in contrast, focus on the substance of the payoff: when remuneration turns on the occurrence of uncertain events, especially sports, it fits statutory definitions of wagering regardless of exchange mechanics or collateral type.
Courts have increasingly favored the latter view for sports-linked markets. Nevada’s ruling explicitly rejected a broad reading of the Commodity Exchange Act to cover touchdown-timed contracts, calling Kalshi’s interpretation strained. In Australia, regulators said users were not engaging with “financial products” under domestic law despite Polymarket’s framing. And in Maryland, the federal court allowed state enforcement to proceed even with CFTC involvement in Kalshi’s approvals. Together, those steps narrow the runway for platforms to claim exclusive shelter under financial regulation, particularly where contracts track athletic contests or other traditionally regulated bet types.
What it means for operators and New Zealand
For prediction markets, the New Zealand development adds a consequential jurisdiction to a growing list where access is curtailed unless operators obtain gambling licenses — a path complicated by product fit and existing monopolies. With Tab New Zealand holding sports betting rights and an igaming market slated to open to a limited set of licensed operators, exchange-style event betting faces structural hurdles to entry. Even if certain event contracts could meet definitions under securities or derivatives law, that status may not displace obligations under the Gambling Act, a point echoed by officials in their public statements and in coverage such as Newsroom’s report on the DIA’s view.
Enforcement momentum at home also raises the cost of noncompliance. The Christchurch ilottery prosecution — chronicled in our piece on the ilottery guilty plea and flagged by 1News — demonstrated the department’s readiness to pursue digital operators that exceed permitted thresholds or sidestep licensing. Expect a similar approach with offshore prediction platforms that continue to serve New Zealanders without authorization. Notifications, geoblocking and, if necessary, civil or criminal action are all on the table.
The broader stakes extend beyond any one platform. How countries classify and license event markets will influence media partnerships, data rights deals, liquidity formation and consumer protection standards. With Australia imposing blocks, several U.S. courts enabling state oversight and New Zealand setting out its interpretation, operators face a narrowing corridor for cross-border growth unless they redesign products or embrace gambling licensure where available. The next tests will come in appellate courts and in how quickly regulators finalize igaming rules that either accommodate or exclude exchange-style betting from the legal market.
