South Korea Sends 18 Polymarket Users to Prosecutors in KRW17.6 Billion Gambling Probe

South Korean police have referred 18 Polymarket users to prosecutors in an illegal gambling investigation involving 26 people and approximately KRW17.6 billion in prediction-market transactions.

South Korean authorities have escalated their crackdown on prediction market platform Polymarket, with the Gangwon Provincial Police Agency referring 18 users to prosecutors on suspicion of illegal gambling.

Police had booked 26 people in the investigation as of September 15. According to National Police Agency information provided to lawmakers, the group placed transactions worth a combined KRW17.6 billion, approximately US$12.7 million. The largest amount attributed to a single user was around KRW5.7 billion.

Polymarket allows users to trade contracts based on the outcome of real-world events, including politics, economics, sport and other subjects. A typical contract asks a yes-or-no question, with its value changing as traders reassess the probability of the event occurring.

South Korean police argue that this structure constitutes gambling under Article 246 of the Criminal Act because users put assets at risk based on outcomes they cannot control. The users under investigation dispute that interpretation, reportedly arguing that Polymarket operates more like a cryptocurrency derivatives market because positions can be traded and closed before an event is settled.

One of the most notable elements of the investigation is how authorities identified the users. Because Polymarket operates as a non-custodial blockchain-based platform without a conventional list of Korean users linked to real-name accounts, investigators analysed public blockchain transaction records and combined them with open-source intelligence techniques to trace individual participants.

The investigation began before South Korea blocked access to Polymarket. Authorities started examining activity earlier in the year, while the country's communications regulator decided on August 18 to restrict domestic access after concluding that the platform provided an environment for illegal gambling.

Polymarket has challenged that interpretation. The company has argued that it does not accept Korean won, does not provide Korean-language services and operates as a non-custodial peer-to-peer market rather than directly running a traditional gambling business.

The legal distinction remains important because prediction markets sit between several established categories. Authorities may view contracts based on uncertain external events as betting, while users can argue that their ability to buy and sell contracts before settlement makes them closer to financial instruments.

The referral of 18 cases now places that question closer to prosecutorial and potentially judicial review. For the wider gambling and crypto industries, the case is also significant because it demonstrates how public blockchain data can be used to pursue individual users even when a platform does not maintain a conventional local customer database.