South Korea has ordered internet service providers to block access to Polymarket after regulators reviewed the prediction market platform’s response to concerns over illegal gambling.
The decision brings South Korea to the list of regions that have outlawed Polymarket while regulatory agencies continue their assessment of predictions markets in the context of existing laws regarding both gambling and finances.
The KCSC started scrutinizing Polymarket in July and provided the platform with the chance to justify why it should not fall under South Korean gambling regulations. Polymarket supposed that the fact that it had a blockchain-based, decentralized structure made its activities unqualified as gambling.
Polymarket said:
Because the platform operates via non-custodial peer-to-peer (P2P) transactions and smart contracts, we do not act as an ‘organiser’. Furthermore, because we do not directly collect or manage funds, nor do we issue sports lottery tickets, we do not satisfy the legal requirements for violating the Criminal Act or the National Sports Promotion Act, nor do we meet the criteria for speculative/gambling activities.
Yet, the KCSC was not convinced by the company’s argumentation and said that the technological setup of Polymarket does not affect the applicability of gambling laws in South Korea to this platform. The regulatory body pointed out that Polymarket deals with contracts related to South Korean events which makes its operations illegal according to the current laws of the country.
Korea Communications Standards Commission said:
The platform cannot evade the application of domestic laws simply by citing technical characteristics or service delivery methods – such as the presence or absence of a Korean-language service, decentralised technology, or centralised technologies (like trading interfaces and order books). Because Polymarket targets South Korea-specific issues (such as ‘August Precipitation in Seoul’) and provides a practical illegal gambling environment to domestic users based on a winner-take-all profit/loss structure driven by chance, an access block is inevitable to protect domestic users.
The South Korea adds to the list of countries, where the prediction market Polymarket faces international restrictions. For Polymarket, the South Korean decision represents yet another market where decentralized technology and financial contractual structures have not been enough to prevent local restrictions.
