South Korean police have booked 26 users of Polymarket on suspicion of illegal gambling and referred 18 of the cases to prosecutors, placing individual participants in a prediction-market platform under criminal scrutiny rather than focusing only on the service’s availability.
The cyber investigation unit of the Gangwon Provincial Police Agency handled the cases, according to Asia Business Daily. Police said the users placed combined wagers worth roughly 17.6 billion won, or $12.7 million, on Polymarket. One user allegedly accumulated stakes of about 5.7 billion won, equivalent to $4.1 million.
Authorities are applying Article 246 of South Korea’s Criminal Act, which covers gambling. Their position is that Polymarket’s yes-or-no contracts amount to bets on events outside a participant’s control. Under the provision cited by police, gambling can carry financial penalties of up to 10 million won.
The cases mark an early test of how South Korean criminal law will be applied to blockchain-based prediction markets, where users trade positions tied to outcomes ranging from elections and economic releases to sporting events and entertainment.
Police classify event contracts as gambling
Polymarket allows users to buy and sell outcome shares tied to a defined question. A contract generally settles at a fixed value if an event occurs and at zero if it does not. Users can also sell their positions before the final outcome is known, meaning the value of a contract can change as market expectations shift.
The users booked by police reportedly argued that this tradable feature makes the contracts more comparable to financial instruments than conventional gambling. That argument could become central if the cases proceed through the courts.
South Korean police have instead focused on the underlying structure of the contracts: participants stake assets on uncertain external events and receive gains or losses depending on the result. The interpretation puts Polymarket-style markets within the country’s definition of gambling regardless of whether users can exit a position before settlement.
That distinction has practical consequences for platforms built around blockchain wallets rather than standard brokerage accounts. A market can provide pricing, trading and early exits similar to a financial product while still being treated as betting if regulators and courts view the contract’s core purpose as wagering on chance-based outcomes.
Access block came before criminal cases
The enforcement action follows a domestic access block imposed last month after South Korea’s media regulator concluded that Polymarket was providing an illegal gambling service. Blocking local access addressed the platform’s availability to Korean internet users; the Gangwon police investigation extends enforcement to alleged user activity.
Polymarket has previously said that it operates on a non-custodial basis, does not accept deposits in Korean won and no longer offers Korean-language services. In a non-custodial arrangement, the platform does not directly hold a user’s assets in the way a centralized exchange or bookmaker typically would.
Those features may complicate operational oversight, but they do not necessarily resolve the legal question facing users. South Korean authorities are examining the nature of the transaction and the participation of people located in the country, rather than only the currency used or the platform’s interface language.
The reported stakes also help explain why the matter has moved beyond a narrow dispute over a niche online service. Police alleged activity totaling 17.6 billion won among just 26 users, indicating that some participants used prediction markets at a scale far above casual entertainment spending.
A court fight could define the product category
If prosecutors bring charges and the cases reach court, the dispute is expected to turn on whether Polymarket contracts should be treated as illegal gambling or as derivatives-style products.
A derivative is a financial contract whose value is linked to another asset, price or event. Prediction-market contracts share some features with derivatives because their prices reflect changing expectations and can be traded before final settlement. Yet they are also designed around a binary outcome, a structure closely associated with wagering.
South Korea’s approach may depend less on technical labels than on whether the contracts fall within legally permitted financial-market activity. Regulated derivatives are generally issued, traded and supervised within a defined legal framework. Offshore event contracts accessible through crypto wallets may lack those features, leaving authorities room to classify them under gambling law.
The Polymarket cases therefore offer a warning to Korean users of offshore event-trading platforms: decentralized settlement and token-based payments do not automatically place a transaction outside local gambling rules. Public blockchain records can also provide investigators with transaction trails, even when a platform does not collect the same customer information required by regulated financial firms.
For Polymarket and similar services, the South Korean cases add another jurisdictional pressure point. Their products may be presented as markets for aggregating probabilities, but local enforcement can assess them through gambling statutes when participation is tied to uncertain real-world events and takes place outside an authorized financial framework.
Curious about regulated event contracts? Learn how Toobit structures compliant markets in its event contracts guide.
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