South Korea bets against Polymarket, sends 18 users to prosecutors in $12.7M gamble probe

South Korean police have referred 18 Polymarket users to prosecutors as part of an illegal gambling investigation that has placed 26 people under scrutiny for wagering about 17.6 billion won ($12.7 million) on the prediction market, according to a report by Asia Economy.

Data submitted by the National Police Agency to Democratic Party lawmaker Yoon Kun-young showed the Gangwon Provincial Police Agency had referred 18 of the 26 individuals to prosecutors as of Tuesday, the report said. The largest single-user wager totaled roughly 5.7 billion won ($4.1 million), and investigators identified users by analyzing publicly available blockchain transactions.

Authorities contend that Polymarket transactions constitute illegal gambling under South Korea's Criminal Act because users stake assets on outcomes that cannot be predicted with certainty, the report said. Users under investigation have argued the platform should be treated as a crypto-based derivatives investment market. Polymarket lets users buy and sell contracts tied to the outcomes of real-world events and operates on a non-custodial, peer-to-peer structure with automated settlement; it does not maintain a conventional list of users by their real names.

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

In June, Gangwon police launched South Korea's first illegal gambling probe into local Polymarket users at the request of the National Police Agency, and on Aug. 18 authorities moved to block the platform. The country's media and communications review commission said Polymarket's winner-takes-all structure encouraged speculative gambling and cited the platform's role in operating markets, setting trading rules, providing crypto deposits, withdrawals and settlement, and collecting transaction fees. Polymarket argued it did not provide Korean-language services or support payments in Korean won and that its non-custodial transactions and use of smart contracts meant it did not directly manage user funds. The commission rejected that argument, saying technical characteristics did not exempt a service from South Korean law.