South Korea has paused any immediate enforcement action against prediction market Polymarket, choosing instead to open a formal hearing so the platform can respond to concerns that its services may violate national gambling laws.
What happened
- The Broadcasting, Media and Communications Review Committee said it will hear Polymarket’s position before deciding whether to issue a corrective request. The extra step is meant to let regulators verify both the legality of Polymarket’s service and how it operates before reaching a final decision.
- The move follows an earlier local probe: in early June the Gangwon Provincial Police — reportedly at the request of the National Police Agency — opened what local media called the country’s first investigation into Polymarket users tied to alleged illegal gambling on election-related markets.
Legal backdrop and penalties
- South Korea’s National Gambling Control Commission Act treats online services that facilitate speculative gambling as illegal gaming businesses, giving authorities powers to monitor and act.
- Under South Korea’s Criminal Act, gambling offenses can draw fines up to 10 million won (about $6,500). Habitual gambling risks up to three years in prison or fines up to 20 million won. Operating a gambling venue for profit can carry penalties of up to five years in prison or a fine of 30 million won.
Polymarket’s stance and access controls
- Polymarket says it implements access restrictions to comply with sanctions, local financial rules, gambling and prediction-market laws, anti-money‑laundering requirements and Know Your Customer checks.
- The company says users from 33 countries — including the United States, the United Kingdom, France, Germany, Brazil, Singapore, Japan and Australia — cannot access the platform, and it also blocks certain regions inside otherwise permitted countries (several Canadian provinces and parts of eastern Ukraine, the company says).
Wider regulatory pressure
- South Korea’s review is part of growing scrutiny of prediction markets globally. In the EU, the European Securities and Markets Authority recently said some event-based contracts could already be covered by MiFID II if they qualify as financial instruments, and could be subject to existing retail restrictions on binary options.
- In the U.S., reports say the Commodity Futures Trading Commission is conducting a broad probe into Polymarket’s business activities, including its social-media operations. That inquiry followed The Wall Street Journal’s reporting that the platform pushed simulated trading videos through paid content creators without adequate disclosure. Polymarket told CNBC it is auditing its promotional content to ensure compliance.
On-chain activity and access circumvention
- On-chain research firm Allium reported that U.S.-linked wallets traded roughly $571 million worth of political contracts on Polymarket over the past year despite the platform’s restrictions on American users. Allium cautioned that country attribution covers only a small subset of wallets and should be treated as directional rather than exact, but the data underscores questions about how users continue to reach offshore prediction markets despite geographic blocks.
Why it matters
- The hearing in South Korea will test how regulators balance enforcement with due process for emerging prediction-market platforms. Decisions there — together with EU and U.S. regulatory moves — could shape operational and compliance norms for Polymarket and similar services worldwide, including how firms handle geo-blocking, AML/KYC, promotion and whether certain products are treated as financial instruments.
What to watch next
- The Broadcasting, Media and Communications Review Committee’s ruling after the hearing.
- Outcomes of the Gangwon police probe and any follow-ups from the National Police Agency.
- Developments in the CFTC inquiry and any regulatory guidance from ESMA or other authorities on how these products should be regulated.
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