South Korea has mandated that internet service providers block access to Polymarket following a review by regulators regarding the platform's compliance with local laws on illegal gambling. This action positions South Korea among the regions that have prohibited access to Polymarket as regulatory evaluations continue in relation to prediction markets and their alignment with existing gambling and financial regulations.
The Korea Communications Standards Commission (KCSC) began investigating Polymarket in July, granting the company an opportunity to explain why it should not be subject to South Korean gambling laws. Polymarket argued that its decentralized, blockchain-based framework excluded it from being classified as gambling activity.
"Because the platform operates via non-custodial peer-to-peer (P2P) transactions and smart contracts, we do not act as an 'organizer'. 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," said Polymarket.
Despite these assertions, the KCSC dismissed Polymarket's defenses, stating that the platform's technological framework does not exempt it from the applicability of gambling laws in South Korea. The KCSC noted that Polymarket's activities involve contracts regarding South Korean events, rendering its operations illegal under current legislation.
The KCSC further clarified, "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, decentralized technology, or centralized technologies (like trading interfaces and order books). Because Polymarket targets South Korea-specific issues (such as ‘August Precipitation in Seoul’) and provides an effectively 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."
With this decision, South Korea adds to the growing list of countries imposing restrictions on Polymarket. For the platform, this ruling signifies another setback in its attempts to operate within various jurisdictions where decentralized technologies and financial contracts struggle against local regulatory landscapes.
