Blockchain platforms have made national gambling bans effectively unenforceable

A paper order against a borderless platform

When the Department of Internal Affairs wrote to Polymarket and Kalshi on 16 February 2026 declaring their services illegal, it looked decisive. DIA gambling director Vicki Scott was blunt: to avoid breaching New Zealand law, the platforms “must cease offering services to New Zealanders”.

Kalshi complied almost immediately, deactivating New Zealand accounts and adding the country to its blocked list. Polymarket did nothing. As the DIA acknowledged at the time, “Polymarket do not appear to have taken any action, and we will be following up with them directly.”

Six months on, that follow-up has produced nothing. Newsroom confirmed on 12 August 2026 that Kiwis can still access and bet on Polymarket without a VPN, and that odds on Luxon being removed by 30 September spiked after news of an emergency National caucus meeting. The ban exists on paper. It does not exist on the internet.

The law is real, the enforcement is not

New Zealand’s framework is not the weak point. Prediction markets are caught by both the Gambling Act 2003 and the Racing Industry Act 2020, meeting the definitions of “gambling” and “bookmaking”. The DIA can fine Polymarket up to $50,000 for every bet it takes from a New Zealand resident.

On paper that is ruinous. In practice it is meaningless against a decentralised, blockchain-based platform with no New Zealand legal presence, no local assets, and no inclination to answer a letter. The fine is only collectable if the operator chooses to be reachable.

The technical gap is the whole story. As Covers.com noted in February 2026, “New Zealand does not currently geoblock gambling websites, so both Polymarket and Kalshi will remain usable until the platforms themselves choose to block New Zealand users.” The regulator’s leverage depends entirely on the target’s goodwill.

Australia showed there is a harder line

Australia banned Polymarket too, and when its media authority found the platform had not blocked Australian IP addresses, with around 1.9 million visits logged from Australia between November 2024 and May 2025, it ordered internet service providers to block access at the network level. New Zealand has no equivalent ISP-blocking regime for gambling sites. It has a strongly worded letter and a fine it cannot collect.

The scale makes the gap embarrassing rather than trivial. Combined transaction volumes on Kalshi and Polymarket approached US$40 billion in 2025, and the two platforms turned over US$1.2 billion on Super Bowl day alone. Before the ban the DIA already knew the sites were taking bets on New Zealand politics and the economy, including a Reserve Bank decision market.

The competitive distortion nobody asked for

Since 1 July 2025, TAB NZ has held a statutory monopoly on online sports and racing betting, whose distributions fund the bulk of the racing codes’ income. TAB NZ carries the full compliance load: licensing, harm minimisation, the 12% offshore gambling duty regime that offshore operators are meant to pay, and the Point of Consumption charges.

Polymarket carries none of it, keeps taking Kiwi money, and faces no practical consequence. Whatever you think of the monopoly, that is a real distortion. The compliant operator pays the costs; the illegal one keeps the market.

There is a genuine harm angle too. The Spinoff flagged the insider-trading problem directly: one user made US$400,000 betting Venezuela’s Maduro would fall, staking US$20,000 shortly before Trump announced strikes on Caracas. The Luxon leadership market is the local version, where anyone with caucus knowledge can take a position the regulator has banned but cannot close. And as the DIA warned, Polymarket “doesn’t appear to have any harm minimisation information or tools on its website.”

The warning for every offshore digital service

This is bigger than betting. It is a live test of whether New Zealand can enforce domestic law against a borderless digital platform that simply ignores it, and the answer so far is that it cannot without the platform’s cooperation or a technical control it has not built. The same logic applies to offshore fintech, AI-driven financial tools and any digital service that can route around a paper order by not replying to it. Until Wellington decides whether it wants ISP-level enforcement, its bans will keep meaning exactly as much as the operators choose to let them.

Sources

• Despite Polymarket ban, Kiwi punters find back doors to bet on Luxon’s fate (2026-08-12)
• Why betting on top online prediction markets is now illegal in New Zealand (2026-02-26)
• Popularity surge drove Polymarket and Kalshi crackdown (2026-02-26)
• Gambling on the future? The crackdown on prediction markets explained (2026-02-23)
• New Zealand Declares Prediction Markets Are Gambling (2026-02-16)
• Offshore Gambling Duty – Special Report (2024-04)