South Korea has launched its first criminal investigation into local users of Polymarket, the leading crypto-based prediction market platform, with police tracing transactions and identifying bettors who wagered on the country's June 3 national election. The move marks a significant escalation in global regulatory scrutiny of prediction markets and raises questions about how governments will classify and regulate event-based betting platforms that operate on blockchain technology.

Why Is South Korea Treating Prediction Markets as Gambling?

South Korean authorities are examining whether prediction market trading qualifies as illegal gambling under the country's strict betting laws. Police departments are using cyber units to investigate transactions and identify the South Koreans who placed bets on Polymarket, according to reports. The investigation centers on whether such wagers violate Article 246 of the Criminal Act, which carries fines up to 10 million won, roughly equivalent to $7,500 USD.

The classification hinges on a fundamental legal question: are prediction markets financial instruments that provide valuable forecasting information, or are they simply gambling platforms dressed up in financial language? In South Korea, almost all forms of gambling are illegal except for a few government-sanctioned cases, including horse racing and lottery betting. No South Korean court has yet issued a definitive ruling on blockchain-based prediction markets, leaving prosecutors in what legal experts describe as "completely unexplored terrain".

Polymarket and similar platforms argue they operate as information markets where participants place bets based on their opinions about upcoming events. However, many countries' regulators classify such businesses as gambling regardless of how operators frame them. The outcome of South Korea's investigation could set a precedent for how courts distinguish event contract trading from standard gambling.

What Regulatory Actions Are Happening Globally?

South Korea's criminal investigation is just one front in a wave of regulatory actions against prediction market operators worldwide. The Korea Communications Standards Commission (KCSC) is conducting its own separate inquiry to determine whether Polymarket should be classified as an illegal service associated with gambling. If the KCSC makes that determination, internet service providers throughout South Korea could be required to block access to the platform.

This approach mirrors measures already undertaken in multiple countries. According to reports, the following nations have either restricted access to prediction market websites or intensified law enforcement operations:

• European Countries: France, Germany, Italy, and Spain have all classified Polymarket as an illegal gambling site or blocked access entirely
• Asia-Pacific Region: India, Australia, and Indonesia have implemented restrictions or enforcement actions against prediction market platforms
• Latin America: Brazil and Argentina have taken regulatory steps to limit or prohibit access
• United States: Several US states have issued cease-and-desist orders against prediction market platforms despite the federal regulatory landscape remaining unsettled

Regulators view the cryptocurrency-based settlement mechanism as particularly problematic. Because prediction markets rely on digital assets for transactions, participation becomes possible without conventional payment systems and from anywhere globally. This structure allows operators to potentially target users who are not legally accessible due to stringent licensing requirements in their home jurisdictions.

How Are Prediction Markets Growing Despite Regulatory Headwinds?

Despite mounting regulatory pressure, prediction market trading volumes have surged dramatically. According to Bernstein data cited in reports, global prediction market trading volume reached approximately $51 billion in 2025, representing a tripling of volume year-over-year. Analysts project even more explosive growth ahead, with forecasts suggesting the market could reach $240 billion in 2026 and $1 trillion by 2030, implying yearly growth rates of up to 80 percent.

This rapid expansion reflects the breadth of events now available for betting on prediction markets. Participants can place wagers on various outcomes including elections, economic indicators, sports games, and other real-world events. What began as a niche aspect of cryptocurrency use has evolved into an industry growing at an incredibly fast pace, attracting both retail and institutional participants.

Steps Regulators Are Taking to Address Prediction Markets

• Criminal Investigations: Police departments are using cyber units to trace transactions, identify users, and determine whether existing gambling laws apply to prediction market activity
• Communications Authority Reviews: Regulatory bodies like South Korea's KCSC are conducting separate inquiries to classify platforms and determine whether internet service providers should block access
• Legislative Clarification: Governments are grappling with whether to treat prediction markets as financial instruments requiring securities regulation, derivatives oversight, or commodity classification, versus treating them as gambling requiring licensing restrictions or outright bans
• Cross-Border Enforcement: Regulators are coordinating internationally to prevent operators from circumventing national restrictions through cryptocurrency settlement mechanisms

The fundamental tension driving regulatory action is that prediction markets occupy an ambiguous legal space. If treated as financial instruments, they would require regulation as securities, derivatives, or commodities. If classified as gambling, operators would need licensing or face strict restrictions or bans. The South Korean investigation will likely influence how other jurisdictions approach this classification question.

For now, the outcome remains uncertain. No court has issued a definitive ruling on blockchain prediction markets in South Korea, meaning prosecutors and regulators are establishing precedent as they investigate. The results of this investigation could reshape how governments worldwide approach prediction market regulation and whether the industry can sustain its current growth trajectory amid tightening legal scrutiny.