South Korean police have referred 18 Polymarket users to prosecutors over alleged illegal gambling, escalating a months-long investigation into wagers placed on the platform's election markets. The Cyber Investigation Unit of the Gangwon Provincial Police Agency formally investigated 26 users as of September 15, according to figures released by Lawmaker Yoon Kun-young's office after receiving data from the National Police Agency.
The 26 users under investigation placed a combined 17.6 billion won, approximately $12.7 million, on Polymarket political, economic, and social markets. One individual wagered about 5.7 billion won, close to $3.8 million, according to the investigation.
Investigation Methods and Legal Arguments
Investigators traced bettors using open-source intelligence techniques applied to public blockchain transaction records, allowing them to identify individual wallet holders despite the platform's anonymous design.
Police argue the trades meet the legal definition of gambling under Article 246 of South Korea's Criminal Act, citing Supreme Court precedent holding that betting property on an uncertain outcome counts as gambling, regardless of skill. The users under investigation counter that their trades resemble derivatives investing rather than wagering, a distinction that will likely shape how courts eventually rule.
Broader Regulatory Crackdown
The prosecutions follow a separate move by South Korea's broadcasting and communications regulator, which in August ordered internet providers to block domestic access to Polymarket, citing its winner-take-all payout structure. Polymarket argued that its lack of a Korean-language service and won payments should exempt it from local law, but the regulator rejected that defense.
Attorney Kim Tae-rim of AXIS Law pointed to a key structural difference: Polymarket's contracts trade on an order book and can be closed before expiry, unlike a typical bet. This distinction may become a central issue for judges to weigh in determining how the platform's contracts should be classified.
How South Korean courts classify Polymarket's contracts could set a precedent for other jurisdictions weighing similar cases, as the platform already faces growing scrutiny from regulators worldwide over how it verifies and monitors traders.
