South Korea Targets Prediction Markets: Polymarket Faces Regulatory Scrutiny

South Korea's communications regulator has launched an investigation into the Polymarket platform. It is examining whether the prediction market violates existing gambling laws. Polymarket now has the opportunity to respond before the Korea Communications Standards Commission (KCSC) decides on possible corrective measures.

This case adds South Korea to a growing list of jurisdictions scrutinizing the Polymarket platform. A separate police investigation against local users of the platform was already launched last month.

Numbers and facts

South Korean law permits gambling exclusively through Sports Toto. This is a state-run sports wagering product operated by the Korea Sports Promotion Foundation (KSPO). The maximum bet per wager is capped at 100,000 Won. This translates to approximately 69 Euros or 49.07 British Pounds.

Reports indicate that hundreds of billions of Won were wagered on the June 3 election via Polymarket. Such sums far exceed the official limits of the state-regulated offering. Users participating in unauthorized betting markets face significant fines of up to 10 million Won, which is about 6,900 Euros.

The KCSC deliberately chose not to act immediately. Instead, the authority wants to await Polymarket's explanation. It seeks to understand how the service operates and whether its business model complies with local laws.

“We decided to provide an opportunity for the company to state its position to thoroughly verify the legality of Polymarket and its service operation methods. We plan to make a final decision on whether to issue a corrective order after comprehensively reviewing the submitted opinions and related materials.” - Korea Communications Standards Commission

Parallel to the KCSC's review, a police investigation is underway in Gangwon Province. This was initiated last month by the local police at the request of the South Korean National Police Agency. The investigation focuses on the platform's users in the country. Meanwhile, the KCSC is addressing whether the platform itself should face corrective action.

The core of the dispute is Polymarket's classification. South Korean authorities consider the platform an illegal gambling operator. Polymarket itself does not classify itself as a gambling company. The company operates an offering that authorities refer to as prediction markets. In these markets, users can bet on events.

Background

South Korea is not the first country to take action against Polymarket. Other countries such as France, Germany, Italy, Brazil, and Australia have also taken measures. In the United States, there are also regulatory conflicts. Several state authorities there have issued cease-and-desist orders. This is despite the Commodity Futures Trading Commission insisting that prediction platforms fall under its purview. Minnesota recently became the first US state to explicitly ban prediction markets by law.

South Korean laws are strict. The National Gambling Control Commission Act and the Criminal Act provide for sanctions. Operating a gambling business for profit can lead to imprisonment and high fines. A complaint against the platform is said to have initiated this investigation. Authorities are also examining whether the Korean-language support and local accessibility of the platform could bring it within the scope of national enforcement measures. This could lead to a formal ban.

Why it matters for German players

For German players, the situation in South Korea is another example of the complexity of gambling regulation worldwide. In Germany, the Glücksspielstaatsvertrag 2021 (GlüStV 2021) regulates the online gambling market. This treaty has established clear rules for providers and players.

Only online casinos licensed by the Gemeinsame Glücksspielbehörde der Länder (GGL) are legally allowed to offer gambling in Germany. They are listed on the so-called GGL whitelist. All other offers, whether from Malta (MGA), Curacao, or elsewhere, are illegal in Germany.

The GlüStV 2021 protects players with strict measures. These include a betting limit of 1 Euro per spin on slot machines and a monthly deposit limit of 1,000 Euros. Those who wish to deposit more can do so under certain conditions and under the control of LUGAS, the cross-state gambling supervision system. This system monitors player accounts and ensures compliance with the rules. It also prevents parallel playing in multiple licensed casinos.

What it means for GGL-licensed casinos

The strict regulation in South Korea, as now being initiated against Polymarket, underscores the necessity for providers to adhere to local laws. Illegal gambling is being combated ever more vigorously internationally. For GGL-licensed casinos, this confirms their business model. They operate within a clear, regulated framework.

German players who play in GGL-licensed casinos benefit from a high level of player protection and legal certainty. There are no gray areas or unresolved legal questions like in the case of Polymarket. Transparency and the strict requirements of the GGL ensure fairness and security. This is a decisive advantage over unregulated offerings.