South Korean authorities have escalated an illegal gambling investigation involving the prediction‑market platform Polymarket by referring 18 of the 26 people under scrutiny to prosecutors. The investigation, launched by the Gangwon Provincial Police Agency at the request of the National Police Agency, identified total wagers of about 17.6 billion won (approximately $12.7 million). The largest single bet recorded was roughly 5.7 billion won ($4.1 million).
Police used publicly available blockchain transaction data to link wallet addresses to individual users, despite Polymarket’s non‑custodial, peer‑to‑peer design that does not maintain a conventional user registry. The agency concluded that the platform’s contracts, which settle on real‑world event outcomes, fall under South Korea’s Criminal Act as illegal gambling because the outcomes cannot be predicted with certainty.
Polymarket, which allows users to buy and sell outcome‑linked contracts, argued that its service should be classified as a crypto‑based derivatives market rather than gambling. The platform also noted that it does not provide Korean‑language interfaces or accept Korean‑won payments, and that its smart‑contract settlement mechanism means it does not directly control user funds. The Media and Communications Review Commission rejected these arguments, stating that the platform’s winner‑takes‑all structure and fee collection create a gambling environment.
The probe, first announced in June as the country’s inaugural illegal‑gambling case targeting local Polymarket users, led to a formal block on the platform on Aug. 18. The commission’s decision cited the platform’s role in setting trading rules, handling crypto deposits and withdrawals, and collecting transaction fees as evidence of an illegal gambling operation.
Tae‑Lim Kim, a managing attorney at AXIS Law, told Asia Economy that the transactions could satisfy the legal definition of gambling under South Korean law. He added that framing the activity as “prediction derivatives” would be a weak defense in criminal proceedings, although the ability to close positions before settlement might be considered by a court.
The case highlights the regulatory challenges posed by decentralized prediction markets that operate without traditional custodial relationships, and underscores South Korea’s broader crackdown on crypto‑related gambling activities.
