South Korea Refers 18 Polymarket Users to Prosecutors in Illegal Gambling Probe

Investigation into Illegal Gambling on Polymarket

In June, the Gangwon Provincial Police initiated South Korea’s first illegal gambling investigation targeting local users of the prediction market Polymarket, following a request from the National Police Agency. By August 18, authorities proceeded to block access to Polymarket after concluding that the platform fostered an illegal gambling environment for users within the country.

Polymarket allows users to buy and sell contracts tied to real-world event outcomes and operates on a peer-to-peer, noncustodial basis without maintaining a traditional user database with real names. Consequently, police identified users by analyzing publicly available blockchain transaction data.

Legal Perspectives and Positions of Involved Parties

South Korean authorities consider Polymarket transactions illegal gambling under the nation’s Criminal Act because users bet assets on uncertain event outcomes. Conversely, users argue Polymarket functions as a crypto-based derivatives market rather than a straightforward gambling site.

The country’s media and communications commission highlighted that Polymarket’s winner-takes-all format encourages speculative gambling. They cited Polymarket’s roles in market operation, trading rule enforcement, cryptocurrency deposit and withdrawal management, settlement processing, and transaction fee collection.

Polymarket representatives contended that the platform neither provides services in Korean nor supports payments in Korean won, and that its noncustodial nature and use of smart contracts mean it does not directly handle user funds. However, regulators rejected these claims, stating that technical features do not exempt services from compliance with South Korean law.

Expert Opinion

Tae-Lim Kim, managing attorney at AXIS Law, told Asia Economy that these transactions could legally qualify as gambling. He explained that categorizing them as prediction derivates poses challenges as a criminal defense, though the possibility to trade contracts and exit positions before settlement could influence judicial assessments.