South Korean police have referred 18 Polymarket users to prosecutors over alleged illegal gambling through prediction-market contracts. The investigation found that 26 users traded a combined 17.6 billion won, or about $12.7 million, across political, economic and social markets on the platform. The case centers on whether Polymarket contracts constitute gambling under South Korean law or are closer to derivative investments that can be closed before expiry.
26 users traded 17.6 billion won
The cyber investigations unit of the Gangwon Provincial Police Agency had opened formal investigations into 26 users as of September 15. The figures were obtained from the National Police Agency by the office of South Korean lawmaker Yoon Kun-young and subsequently disclosed publicly. Eighteen of those users have been referred to prosecutors.
Investigative materials show that one user alone committed about 5.7 billion won, equivalent to nearly $3.8 million. The transactions covered political, economic and social questions listed on Polymarket, with participants allocating funds based on the outcome of individual contracts. Trading volumes varied significantly among users.
Public blockchain records helped identify users
Even after access to Polymarket was restricted in South Korea, investigators used open-source intelligence and publicly available blockchain transaction records to trace related fund flows and wallet addresses. Police used those records to identify some wallet holders and link them to activity on the platform.
Polymarket uses a degree of anonymity, but blockchain transactions remain publicly searchable. The investigation highlights how on-chain data can provide an important lead for law enforcement when platform account information is limited or users participate through self-hosted wallets.
Legal dispute: gambling or investment?
Police argue that the transactions fall within the definition of gambling under Article 246 of South Korea’s Criminal Act, which covers staking property on uncertain outcomes. They also cited existing Supreme Court precedents indicating that the need for analysis or judgment does not necessarily remove the gambling element when the result remains uncertain.
The users under investigation argue that Polymarket trading is closer to derivative investing than to a conventional wager. Unlike a one-time bet, Polymarket contracts are matched through an order book, allowing traders to close their positions before a contract expires. How prosecutors and the courts classify the contract structure, the participants’ trading purposes and the way returns are generated could become central to the case.
Kim Tae-rim, a lawyer at AXIS Law, said Polymarket contracts differ structurally from typical gambling because they can be traded or exited through an order book before expiration, whereas traditional bets generally settle in a single payment based on the final result. It remains unresolved, however, whether that mechanism is sufficient to change the legal characterization of the activity under South Korean law.
Domestic access to Polymarket has been restricted
The referrals come after South Korea stepped up scrutiny of prediction-market platforms. In August, the Korea Communications Standards Commission asked internet service providers to block domestic access to Polymarket, citing, among other reasons, the platform’s winner-takes-all payout structure.
Polymarket argued that it did not offer Korean-language services and that its payout arrangements should not be subject to South Korean law. Regulators rejected that position and moved ahead with restrictions on domestic access.
With 18 users now entering the prosecutorial process, the case has moved beyond whether Polymarket can operate in South Korea to whether individual participation in its contracts may carry criminal liability. Publicly available information indicates that police have completed part of the investigation and advanced a legal characterization, but whether prosecutors will bring charges and how courts will interpret Article 246 remain to be determined.