South Korean police have launched the country’s first known illegal gambling investigation into domestic users of Polymarket, the world’s largest prediction market platform, marking a significant escalation in regulatory scrutiny of crypto-based event betting. The Gangwon Provincial Police Agency is investigating local users on suspicion of violating gambling laws after a request from the national police headquarters, with the inquiry covering users across South Korea, including Gangwon Province.
The probe focuses on whether South Korean residents who placed bets on Polymarket violated Article 246 of the Criminal Act, which covers gambling and habitual gambling offenses. Individuals found guilty of illegal gambling can face fines of up to 10 million won, or roughly $7,300, depending on the case. South Korea permits only limited forms of state-authorized betting, including Sports Toto, which carries a 100,000 won betting limit, while most private online betting services are treated as illegal.
Polymarket allows users to trade event contracts tied to real-world outcomes, including elections, sports, economic data, geopolitical developments and crypto prices. The platform operates using blockchain infrastructure and stablecoins, enabling users to buy and sell positions that settle based on whether a specified event occurs. South Korean authorities are now examining whether those contracts should be treated as illegal wagers rather than financial or informational markets.
Election markets trigger enforcement attention
The investigation reportedly centers partly on Polymarket markets tied to South Korea’s June 3 local elections. Betting activity linked to those races reportedly reached hundreds of billions of won, drawing attention from enforcement authorities because political event markets are not licensed under South Korea’s gambling framework.
The case is legally important because Polymarket does not operate like a traditional bookmaker. Users trade positions against one another, with prices moving based on market expectations rather than fixed odds set by an operator. Supporters of prediction markets argue that this structure can produce useful signals about public expectations. Regulators, however, often focus on the economic substance of the transaction: users risk money on uncertain future events and receive payouts based on outcomes.
That distinction is now central to the South Korean probe. If police and prosecutors classify Polymarket activity as gambling, the case could create a precedent for enforcement against users of decentralized prediction platforms, even when the platform itself is based overseas and does not have a conventional domestic operating presence.
Regulatory pressure widens for prediction markets
The investigation adds South Korea to a growing list of jurisdictions scrutinizing prediction markets. Spain recently blocked access to Polymarket and Kalshi while reviewing whether they require gambling licenses, and other countries have taken similar steps against offshore or decentralized betting platforms. The regulatory pattern shows that prediction markets are increasingly being assessed through local gambling, consumer protection and financial market rules rather than only through crypto regulation.
For Polymarket and similar platforms, the South Korean case highlights a difficult compliance problem. Decentralized infrastructure can make platforms accessible across borders, but users remain subject to domestic law. That creates legal risk for individuals who assume that blockchain-based access removes local gambling restrictions.
The market impact could be significant if enforcement expands. South Korea is one of the world’s most active crypto markets, with high retail participation and strong interest in speculative digital assets. A precedent targeting users could reduce local activity on prediction markets and increase pressure on internet service providers, exchanges and wallet providers to monitor or restrict related flows.
The broader implication is that prediction markets are moving from a crypto-native growth story into a regulatory test case. Their future will depend not only on trading volume and market accuracy, but also on whether governments classify event contracts as financial instruments, information markets or illegal gambling. South Korea’s first probe into Polymarket users may become an early benchmark for that decision.
