South Korea has mandated that internet service providers block access to Polymarket following a review by regulators concerning potential illegal gambling activities associated with the platform. This decision places South Korea among the regions that have banned Polymarket as regulatory agencies continue to evaluate prediction markets in light of national gambling and financial laws.
The Korea Communications Standards Commission (KCSC) began its investigation into Polymarket in July, offering the platform an opportunity to argue against classification as a gambling entity under South Korean regulations. Polymarket posited that its decentralized, blockchain-based nature exempted it from these laws.
In its defense, Polymarket stated, "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."
However, the KCSC was not persuaded by these arguments. The commission determined that the technological features of Polymarket do not exempt it from the application of South Korean gambling laws. They noted that the platform offers contracts tied to events in South Korea, which renders its operations illegal under current laws.
According to the KCSC, "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)." They emphasized that since Polymarket addresses South Korea-specific issues, such as "August Precipitation in Seoul," it creates an illegal gambling environment for local users due to its winner-take-all structure that relies on chance. Therefore, blocking access became necessary to safeguard domestic users.
This action by South Korea adds to the growing list of countries where Polymarket faces restrictions, and it exemplifies how decentralized technology has not shielded the platform from local regulatory challenges.
