Korean police reportedly referring Polymarket users to authorities for possible indictment

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The Backstory

Prediction markets meet Korea’s gambling law

South Korea’s reported move to refer Polymarket users for possible indictment marks a sharper phase in a dispute that has been building for months: whether blockchain-based event contracts should be treated as financial-style instruments or illegal wagers. The immediate question is narrow, involving 26 users and KRW17.6 billion in suspected bets. The broader issue is whether Korean authorities can apply long-standing gambling statutes to a decentralized platform that has no conventional local customer database and operates outside the domestic betting system.

Under South Korean law, legal sports betting is tightly confined to Sports Toto, the state-authorized product operated by the Korea Sports Promotion Foundation. Betting through unauthorized channels can trigger penalties under Article 246 of the Criminal Act, while sports-related betting can also raise issues under the National Sports Promotion Act. That framework was built for bookmakers, offshore gambling sites and organized betting rings. Polymarket, by contrast, lets users buy and sell positions tied to real-world outcomes, including elections, economic data, sports and weather. Police and regulators say the economic substance is still gambling if users stake value on uncertain events and win or lose depending on the result.

A block came before the referrals

The criminal referrals follow an earlier regulatory decision that cut off domestic access to the platform. In August, South Korea’s media regulator moved to block Polymarket after concluding that its event-contract structure created what it regarded as an illegal gambling environment. The decision came after a staged review in which officials examined the platform’s “Yes” and “No” markets and the way profits and losses are determined at settlement. Complete iGaming previously reported that South Korea had blocked Polymarket over alleged illegal gambling operations, a step that put the platform in the same enforcement category as overseas gambling sites targeted for access restrictions.

That blocking order did not end the matter. It created a regulatory premise for police: if the platform was deemed to provide an illegal gambling environment to Korean users, investigators could pursue users whose transactions appeared to show participation. Polymarket argued during the review that it was not subject to South Korean law because it had removed Korean-language services and disabled KRW payments. Korean officials rejected that distinction, focusing instead on whether domestic users could still access and use the service. The referrals now test how far that position can extend in criminal cases against individual users rather than a platform operator.

Investigators turned to the blockchain

The Polymarket case is also notable for how authorities appear to have built their user list. Police have said the platform’s non-custodial, peer-to-peer design meant there was no ordinary customer database to seize from a domestic operator. Instead, investigators relied on public blockchain transactions and open-source intelligence to identify suspected users. Complete iGaming’s earlier account of the case described how South Korea targeted 26 Polymarket users in a suspected US$12.7 million illegal gambling case, with 18 cases referred to prosecutors and one user linked to roughly KRW5.7 billion in trades.

That investigative approach matters because it signals that decentralized market design may not shield users from enforcement. It also raises evidentiary questions. Blockchain activity can show wallets, transaction flows and positions, but prosecutors still need to connect wallets to people and establish that the activity fits the legal definition of gambling. Users are expected to argue that event contracts are derivative-like instruments because positions can be bought and sold before final settlement, potentially allowing trading strategies beyond a simple win-or-lose bet. Police have taken the opposite view: if a user risks digital assets on an uncertain outcome and gains or loses value according to that outcome, the conduct can fall within gambling law.

Part of a wider enforcement cycle

The Polymarket referrals are not an isolated enforcement action. South Korea has been expanding its campaign against illegal online gambling, particularly sites based overseas or structured to evade domestic controls. Authorities have pursued operators, suppliers, payment facilitators and users in a series of cases that show a preference for broad disruption rather than single-site enforcement.

In one major operation, Korean police arrested more than 5,000 people during a year-long crackdown and recovered KRW123.5 billion in illegal gambling revenue. Complete iGaming reported that the South Korean gambling crackdown produced 5,196 arrests, with authorities expressing concern about teenagers and young adults participating in illicit gambling. The operation is expected to continue into October 2026, with a focus on overseas-based sites and organized networks that serve Korean customers from abroad.

That enforcement climate helps explain why Polymarket is receiving close attention. Even if prediction markets differ from casino sites or sportsbook clones, regulators are focused on user harm, cross-border access and the difficulty of controlling products that operate outside Korea’s licensing structure. When authorities see a platform offering sports, politics and other outcome-based markets to local users, the line between innovation and illegal gambling becomes a policy question as much as a legal one.

Overseas networks raised the stakes

Recent Korean cases have also shown how illegal gambling enforcement overlaps with money laundering, organized crime and national security. Authorities moved to prosecute the alleged head of a large overseas gambling ring that operated from Malaysia and Cambodia and was linked to billions of dollars in wagers. Complete iGaming reported that Korean authorities sought charges against the alleged operator of a massive illegal overseas gambling ring, describing a network that supplied game money to more than 1,400 domestic gambling sites.

In a separate case, prosecutors charged a South Korean man over suspected involvement in selling illegal gambling-site domains tied to North Korean hackers. That case, involving allegations that a portion of gambling proceeds flowed to North Korea, showed why online gambling is treated as more than a consumer-protection issue. Complete iGaming reported that a South Korean man was charged over a North Korean-linked gambling operation, with prosecutors citing risks to national security and criminal financing.

Those cases differ sharply from Polymarket, which is a global prediction market rather than an alleged criminal gambling syndicate. Still, they shape enforcement priorities. Korean authorities have repeatedly linked online gambling to offshore evasion, youth exposure, money movement and organized networks. That backdrop makes regulators less likely to accept technical distinctions if a product allows domestic users to stake value on uncertain outcomes outside authorized channels.

What prosecutors must now decide

The newly referred Polymarket files arrive as South Korea’s prosecution structure is itself being reshaped, with cases moving to a newly created Prosecution Service after a justice overhaul intended to separate investigative and prosecutorial powers. Prosecutors will have to decide whether the police theory is strong enough to charge users and whether the cases are suitable vehicles to establish a precedent for prediction markets.

The stakes extend beyond the 26 users already identified. A prosecution could reinforce South Korea’s view that access controls, language settings and payment options do not determine legal exposure if residents can still use a platform. It could also deter Korean users from decentralized betting-like products, even where operators are offshore and transactions are conducted in digital assets. Conversely, if prosecutors decline to indict or courts find that Polymarket’s contracts do not meet the gambling definition, regulators may need a more tailored legal framework for prediction markets.

That uncertainty mirrors debates abroad, including in the U.S. and Australia, over whether sports and event contracts belong under gambling regulators or financial-market oversight. South Korea’s approach so far has been enforcement-first: block access, identify users and test existing gambling statutes. The next step will show whether that framework can carry a criminal case against individuals trading on a global prediction platform.