The South Korean regulator has dealt another blow to the decentralized prediction market. On August 18, the Korea Communications Standards Commission (KCSC) officially approved blocking access to the Polymarket platform, classifying its activities as an illegal gambling organization. This decision is a logical continuation of global pressure on the sector, which is increasingly coming under the scrutiny of authorities worldwide.
Core of the Claims: The "Winner Takes All" Model
The regulator's main focus is on markets related to political events, payments, sports matches, elections, and even weather conditions. According to the KCSC, such contracts operate on a "winner takes all" principle, which directly encourages gambling behavior. The financial outcome for participants depends on events beyond their control, which falls under the definition of betting in South Korean law.
Special attention is paid to the platform's role itself. The Commission emphasizes that Polymarket's administration actively manages the creation of markets, sets trading rules, facilitates the deposit and withdrawal of digital assets, and charges fees on each transaction. In the regulator's view, this rules out the possibility of interpreting the service as neutral infrastructure.
Polymarket's Arguments and the Regulator's Counterarguments
The Polymarket team attempted to counter the accusations by pointing out that the platform is a non-custodial P2P environment based on smart contracts and does not directly hold users' funds. However, the KCSC rejected this defense, stating that technical features—including decentralized elements and the trading interface—do not exempt the platform from national laws. According to the regulator, the block is necessary to protect local users from potential financial risks.
This decision fits into a broader context. Earlier in August, New York authorities initiated a review of the marketing practices of the largest prediction market operators, including Polymarket and Kalshi, as well as associated crypto exchanges Coinbase and Gemini Titan. Thus, there is a coordinated tightening of regulation across different continents.
My analysis: The situation with Polymarket demonstrates a fundamental conflict between decentralized financial protocols and traditional jurisdictions. Even if the platform is technically not a custodian, its operational model—with market management and fees—makes it vulnerable to regulatory claims. I expect that in the coming months, other Asian regulators will follow Seoul's example, which could significantly limit access to such services in the region, but is unlikely to halt the development of prediction markets themselves as an asset class.