18 Polymarket users referred to prosecutors in South Korea over alleged illegal gambling

South Korean police have reportedly referred 18 Polymarket users to prosecutors in an illegal gambling investigation involving 26 people who collectively wagered about 17.6 billion won ($12.7 million). For PSPs and high-risk operators, the important part is not the headline number; it is that authorities are treating prediction-market activity as gambling when users stake assets on uncertain outcomes.

1. According to Asia Economy, data submitted by the National Police Agency to the office of Democratic Party lawmaker Yoon Kun-young showed that the Gangwon Provincial Police Agency had placed 26 people under investigation as of Tuesday and sent 18 of them to prosecutors. The largest amount wagered by a single user was about 5.7 billion won ($4.1 million).
2. Police reportedly identified users by analyzing publicly available blockchain transactions. Polymarket operates on a noncustodial, peer-to-peer structure with automated settlement, and the report said it does not maintain a conventional list of users by their real names.
3. Authorities reportedly said Polymarket transactions constitute illegal gambling under South Korea’s Criminal Act because users stake assets on outcomes that cannot be predicted with certainty. The users argued that Polymarket should instead be treated as a crypto-based derivatives investment market, according to the report.
4. In June, Gangwon police launched South Korea’s first illegal gambling probe into local Polymarket users at the request of the National Police Agency. On Aug. 18, South Korean authorities moved to block Polymarket after determining that the prediction market provided an illegal gambling environment to users in the country.
5. The country’s media and communications review commission said the platform’s winner-takes-all structure encouraged speculative gambling, citing Polymarket’s role in operating markets, setting trading rules, providing crypto deposits, withdrawals and settlement, and collecting transaction fees. Polymarket argued that it did not provide Korean-language services or support payments in Korean won, but the commission rejected the argument, saying technical characteristics did not exempt a service from South Korean law.

Tae-Lim Kim, managing attorney at AXIS Law, told Asia Economy that the transactions could meet the legal requirements for gambling. He said describing them as prediction derivatives would be difficult to use as a direct defense in criminal proceedings, although the ability to trade contracts and exit positions before settlement could be relevant to a court’s assessment.