South Korea Refers 18 Polymarket Users to Prosecutors Over Illegal Gambling Probe
Korean law enforcement authorities have referred 18 Polymarket users to prosecutors following a cyber-investigation into illegal gambling involving prediction market contracts, according to reporting. The Gangwon Provincial Police Agency opened investigations into 26 individuals who collectively traded approximately 17.600 millones de wones, roughly 12,7 millones de dólares USD, across political, economic, and social markets on the platform.
Investigation and Blockchain Tracking Details
The investigation stems from data obtained from the Korean National Police Agency and disclosed by the office of Democratic Party lawmaker Yoon Kun-young, as reported. Investigators found that transaction volumes varied widely among participants, with a single user executing trades totaling roughly 5.700 millones de wones, or about 3,8 millones de dólares USD.
Because Polymarket operates with a peer-to-peer, non-custodial structure with automated settlement and lacks traditional real-name user registries, the Gangwon cyber-investigation unit utilized open-source intelligence and public blockchain transaction records. According to, police tracked fund movements and wallet addresses to identify holders and link them to activity on the platform.
The Legal Dispute: Gambling Versus Derivatives
The core dispute centers on whether prediction market contracts constitute illegal gambling under Article 246 of South Korea’s Criminal Act, which penalizes wagering property on uncertain outcomes. Police officials cited Supreme Court precedents establishing that the requirement for analytical skill or judgment does not remove the element of chance when final outcomes remain uncertain.
Conversely, the investigated users argued that Polymarket functions more like a cryptocurrency-based derivatives investment market. Unlike traditional single-payment bets, the platform utilizes an order book that allows participants to trade and close positions before contract expiration.
Kim Tae-rim, attorney at AXIS Law, stated to Asia Economy that while the transactions could meet legal requirements to be considered gambling, the structural ability to trade and close positions prior to final settlement might be relevant for a court’s evaluation. Kim noted that describing the contracts simply as prediction derivatives remains a difficult defense in a criminal proceeding, according to and reports.
Regulatory Crackdown on Prediction Markets
The referral to prosecutors follows broader regulatory actions by South Korean authorities against prediction markets. In June, the Gangwon police launched the nation’s first illegal gambling investigation into local Polymarket users following a directive from the National Police Agency.
On August 18, the Korea Communications Standards Commission moved to block domestic access to Polymarket after determining the platform provided illegal gambling environments. The media review commission stated that the platform’s winner-take-all structure encouraged speculative betting, pointing to Polymarket’s role in establishing trading rules, managing crypto deposits and withdrawals, and collecting transaction fees.
Polymarket countered that it does not provide services in Korean, does not accept South Korean won payments, and does not directly manage user funds due to its non-custodial smart contract architecture. However, the commission rejected these arguments, ruling that technical features do not exempt a service from complying with South Korean law.