Election bets put Polymarket under criminal scrutiny in South Korea

It seems that the South Korean authorities have initiated the country’s first-ever criminal case against the local users of Polymarket. It has created another legal front in the wave of actions taken against the prediction market operators.

According to the reports, police departments are using their cyber units to investigate transactions and figure out the identities of the South Koreans who bet at Polymarket. The decision was made amid the heavy trading in the run-up to the June 3 national election.

This is an important step for the crypto-connected prediction markets. They would understand how the government will approach them in the future.

It is known that Polymarket and similar platforms claim they run information markets, in which people place bets based on their opinions about upcoming events. However, many countries’ regulators classify such businesses as gambling, despite all efforts to hide it with fancy language.

Polymarket enters legal Gray zone

In South Korea, almost all forms of gambling are illegal, except for a few government-sanctioned cases, including horse racing and lottery betting. Authorities are investigating whether betting in election prediction markets is covered by the existing gambling legislation.

According to legal experts, no South Korean court has made a direct ruling on blockchain prediction markets. This means that the prosecutors find themselves in completely unexplored terrain in their case. The outcome will affect whether the event contract trading needs to be distinguished from standard gambling.

This is just one aspect that is putting the Polymarket platform under pressure.

The Korea Communications Standards Commission (KCSC) is conducting its own inquiry to establish whether Polymarket falls under the category of illegal services associated with gambling. If this determination proves true, it can result in blocking the site by internet providers throughout South Korea.

This step would repeat measures already undertaken in various countries.

Regulators around the globe grow more skeptical about prediction markets. Nations such as France, Germany, Italy, Spain, India, Brazil, Australia, Argentina, and Indonesia either restricted access to the websites or intensified law enforcement operations there. But at the same time, some American states have also raised issues regarding the operation of prediction market websites.

Betting platform or financial product?

Advocates posit that they work as financial tools because they provide valuable information and enhance forecasting. Opponents posit that users still bet on uncertain outcomes. Thus, even if technological mechanisms change, the essence of this practice remains inherently similar to gambling.

Treating prediction markets as financial means will lead to their regulation as securities, derivatives, or commodities. However, considering them as gambling might imply that operators need licensing or that there will be strict restrictions or bans placed on them.

Prediction markets usually rely on cryptocurrencies for settlements. Hence, participation becomes possible without any conventional payment systems and from anywhere globally. Regulators view this format as a workaround through which operators can target users who are not legally accessible due to stringent licensing in their jurisdictions.

According to Bernstein, trading volumes of crypto-based prediction markets amount to about $51 billion for the year 2025. Furthermore, some experts expect yearly growth rates of up to 80%, which implies a trillion-dollar volume within this decade.

This concept started as a specific aspect of cryptocurrency use but became an industry growing at an incredibly fast pace. Now it provides opportunities to place bets on various outcomes, including elections, economic indicators, sports games, and other real-world events.