South Korean police have referred 18 Polymarket users to prosecutors as part of an illegal gambling investigation covering 26 people who collectively wagered about 17.6 billion won, roughly $12.7 million.

According to Asia Economy, data submitted by the National Police Agency to the office of Democratic Party lawmaker Yoon Kun-young shows that the Gangwon Provincial Police Agency had placed 26 people under investigation as of Tuesday and sent 18 of them to prosecutors. The largest amount wagered by a single user was about 5.7 billion won ($4.1 million), the report said.

Under South Korea's criminal procedure, a referral to prosecutors moves the cases out of the police stage and puts the decision on whether to pursue formal charges in prosecutors' hands.

Police identified the users by analyzing publicly available blockchain transactions, according to the report. Polymarket allows users to buy and sell contracts tied to the outcomes of real-world events and operates on a noncustodial, peer-to-peer structure with automated settlement. Because of that design, the platform does not maintain a conventional list of users under their real names — yet the probe shows that on-chain activity recorded on public blockchains can still be traced back to individual users.

Authorities reportedly said Polymarket transactions constitute illegal gambling under South Korea's Criminal Act because users stake assets on outcomes that cannot be predicted with certainty. The investigated users countered that Polymarket should instead be treated as a crypto-based derivatives investment market, according to the report.

South Korea's escalating moves against Polymarket

In June, Gangwon police launched South Korea's first illegal gambling probe into local Polymarket users at the request of the National Police Agency. On Aug. 18, South Korean authorities moved to block Polymarket after determining that the prediction market provided an illegal gambling environment to users in the country.

The country's media and communications review commission said the platform's winner-takes-all structure encouraged speculative gambling, citing Polymarket's role in operating markets, setting trading rules, providing crypto deposits, withdrawals and settlement, and collecting transaction fees.

Polymarket argued that it did not provide Korean-language services or support payments in Korean won, and that its noncustodial transactions and use of smart contracts meant it did not directly manage user funds. The commission rejected the argument, saying technical characteristics did not exempt a service from South Korean law.

South Korea's enforcement push comes amid wider regulatory friction over prediction markets, including in the United States, where the CFTC and a soldier accused of an illegal Polymarket bet have sparred over how such platforms should be interpreted.

Tae-Lim Kim, managing attorney at AXIS Law, told Asia Economy that the transactions could meet the legal requirements for gambling. He said describing them as prediction derivatives would be difficult to use as a direct defense in criminal proceedings, although the ability to trade contracts and exit positions before settlement could be relevant to a court's assessment.

With 18 of the 26 cases now with prosecutors and the remaining eight still under investigation as of Tuesday, the focus shifts to whether formal charges follow and how courts weigh the gambling-versus-derivatives question at the center of the defense.

Related: CFTC, US soldier accused of illegal Polymarket bet spar over interpretation of prediction markets
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