The Broadcasting, Media and Communications Review Committee of South Korea is set to evaluate Polymarket's response regarding concerns about its gambling practices before deciding on any corrective measures.
On Monday, the committee announced that it would permit Polymarket to present its case prior to making a final determination on the request for corrective action. They stated, “We chose to give Polymarket the chance to express its viewpoint to thoroughly assess the legality of its operations and service delivery.”
This review is focused on whether Polymarket's activities are classified under the National Gambling Control Commission Act of South Korea, which deems online platforms that enable speculative gambling as illegal and empowers authorities to monitor and intervene with such services.
This latest examination signifies a change in South Korea's approach towards Polymarket, shifting the scrutiny from individual users to the platform itself. This follows a previous police investigation into South Korean users suspected of engaging in illegal gambling via election-related prediction markets.
On June 5, the Gangwon Provincial Police initiated what local news outlets referred to as the first illegal gambling investigation in the country targeting users of Polymarket. This investigation was launched at the behest of the National Police Agency.
According to South Korea’s Criminal Act, engaging in gambling can result in fines up to 10 million won (approximately $6,500), while habitual offenders may face up to three years in prison or fines of up to 20 million won. Operating a gambling venue for profit could lead to a prison sentence of up to five years or fines reaching 30 million won.
The review of Polymarket is one of South Korea's initial significant regulatory actions against a blockchain-based prediction market. The outcome may set a crucial precedent regarding the legal treatment of such markets under current laws.
This case also illustrates South Korea's overall strategy towards digital assets. While the nation has implemented clearer regulations for cryptocurrencies, authorities remain cautious about new blockchain-based financial products, especially those that involve speculative practices and consumer protection concerns.
A ruling against Polymarket could have implications beyond the platform itself, potentially increasing scrutiny on other decentralized prediction markets if authorities conclude that these services are subject to existing gambling regulations.
The Korea Communications Standards Commission has yet to announce when it will finalize its decision. The commission is anticipated to conclude its review after evaluating Polymarket's response, with regulators, legal professionals, and industry stakeholders closely monitoring the situation.
Polymarket has indicated that it restricts access in 33 countries, including the United States, the United Kingdom, France, Germany, Brazil, Singapore, Japan, and Australia, to comply with sanctions and various financial regulations, as well as gambling and prediction market laws, anti-money laundering measures, and Know Your Customer protocols.
Additionally, access is restricted in Canadian provinces like Alberta, British Columbia, Ontario, and Quebec, as well as in regions such as Crimea, Donetsk, and Luhansk in Ukraine.