Polymarket users face gambling investigation in South Korea

South Korean police have launched the country’s first known investigation into domestic Polymarket users, with authorities examining whether participation in the prediction market platform violated local gambling laws.

According to a Chosun Biz report, the Gangwon Provincial Police Agency is investigating South Korean users of Polymarket on suspicion of illegal gambling, opening what is believed to be the first official probe focused on users of the blockchain-based prediction platform.

The investigation began after a request from the national police headquarters. The inquiry covers users living across South Korea, including Gangwon Province.

Polymarket allows users to buy and sell positions tied to the outcomes of real-world events, including elections, sports competitions, economic data releases, and geopolitical developments. Operating on the Ethereum blockchain, the platform uses smart contracts to settle markets without a central intermediary.

Under South Korean law, betting activity is tightly restricted. According to Chosun, aside from government-authorized Sports Toto products that carry a ₩100,000 (approx. $65) betting limit, placing wagers through other betting platforms is generally considered illegal. 

Authorities are therefore examining whether participation on Polymarket falls under Article 246 of the Criminal Act, which covers gambling and habitual gambling offenses and carries penalties of up to ₩10 million in fines.

Investigation could test South Korea’s approach to prediction markets

Representing some of the users under investigation, attorney Ahn Chang-bo told Chosun Biz that the legal elements required for a gambling offense appear to be present. At the same time, he noted that no domestic precedent exists involving punishment for Polymarket use, making the potential outcome difficult to predict.

Although regulators have not blocked access to Polymarket, South Korean users have reportedly been able to access the platform directly and place trades using dollar-backed stablecoins. 

According to Chosun, markets tied to the country’s June 3 local elections attracted betting activity worth hundreds of billions of won.

Because Polymarket operates through decentralized infrastructure rather than a traditional operator-controlled system, enforcement efforts are likely to focus on individual users rather than the platform itself.

Recent actions by South Korean authorities suggest regulators and prosecutors have become more willing to apply existing laws to activities taking place on decentralized networks. 

In May, prosecutors charged several individuals over the CATFI meme coin rug pull, a case described by Digital Asset as the country’s first arrest and prosecution involving a decentralized exchange under the Virtual Asset User Protection Act.

Prosecutors alleged the group created and promoted the Solana-based token through misleading social media posts before executing a rug pull that left investors with substantial losses. Authorities said the case demonstrated that enforcement efforts were no longer confined to centralized exchanges or locally listed tokens.

More Polymarket users under scrutiny

Outside South Korea, prediction markets have also drawn attention from regulators. U.S. authorities recently charged Google software engineer Michele Spagnuolo with insider trading linked to Polymarket, alleging he used confidential company information to profit from event contracts tied to Google’s annual search rankings.

Alongside that criminal case, the Commodity Futures Trading Commission filed a civil complaint and reiterated that insider trading laws apply to prediction markets. 

The platform has also faced legal disputes and regulatory scrutiny across several U.S. states as policymakers continue debating whether such markets should be treated as derivatives products or gambling activities.