South Korea opens first Polymarket gambling probe as prediction markets face crackdown
In brief
- South Korean police opened gambling probe into Polymarket users wagering on June 3 local elections
- Six of top 20 crypto adoption markets restricted prediction platforms via law or ISP blocks
- Prediction market volume surged to $10 billion monthly by May 2026 amid regulatory backlash
The South Korea probe
The Gangwon Provincial Police Agency is leading the investigation at the request of the National Police Agency, tracing cryptocurrency transaction records to identify users nationwide. Those identified face potential fines of up to 10 million won ($6,500) under Article 246 of the Criminal Act.
The scale of activity in South Korea alone signals why regulators are moving. Polymarket's resolved 2026 Seoul mayoral election market showed a total volume of $52.2 million. South Korea ranks 15th in Chainalysis' 2025 Global Crypto Adoption Index, meaning it's a core market for crypto-native products.
A pattern across high-adoption jurisdictions
South Korea isn't alone. Six of the top 20 crypto adoption markets have moved against prediction platforms through gambling law, derivatives restrictions, ISP blocks, user enforcement, or some combination of all four. The crackdown accelerates even as the platforms themselves grow. Combined monthly trading volume on Kalshi and Polymarket climbed from under $5 billion in September 2025 to over $10 billion in May 2026.
For context, legal US sportsbooks averaged about $14 billion in monthly wagers throughout 2025. Prediction markets are approaching that scale, but without the regulatory guardrails sportsbooks operate under.
The volume concentration matters. Sports, politics, and crypto drove 91% of Kalshi's global volume and 90% of Polymarket's since July 2024. Sports alone accounted for 80% of Kalshi volume, while politics accounted for 32% of Polymarket's. When prediction markets become vehicles for betting on political outcomes, they collide with gambling laws designed to protect domestic policy from financial speculation.
Brazil and India move first
Brazil acted in April. On April 24, Brazil's Finance Minister Dario Durigan announced that the National Monetary Council's Resolution No. 5,298 blocked 27 platforms, including Polymarket, Kalshi, PredictIt, and Robinhood's forecasting feature. Brazil's resolution prohibited derivatives tied to sports, online gaming, political, electoral, cultural, and social outcomes, with only contracts tied to economic benchmarks surviving.
The timing was brutal for Kalshi. Kalshi had announced a Brazilian distribution partnership with brokerage XP International in March 2026, one month before the block took effect.
India followed with statutory force. Both houses of Parliament passed India's Promotion and Regulation of Online Gaming Act 2025 in August 2025, received presidential assent the same month, and came into force on May 1, 2026. Under India's law, prediction markets fall into prohibited online money gaming, with the classification covering event contracts regardless of how operators frame them as derivatives or forecasting tools.
India's MeitY issued a blocking order against Polymarket and is preparing a similar order for Kalshi. The ministry went further: on April 25, India's ministry sent a letter specifically to VPN providers, warning them against enabling access to blocked platforms.
Indonesia took a narrower approach. Indonesia blocked Polymarket after markets on the potential early end of President Prabowo Subianto's term circulated.
The integrity problem underneath
Platforms aren't sitting idle. Since the start of 2026, Kalshi flagged over 400 suspicious trades, more than double its total for all of 2025. The surge in detection reflects both growth and heightened scrutiny—but it also signals that market manipulation and insider trading remain live risks as volume scales.
Regulators see the gap. Crypto adoption outpaced legal permission for crypto-native financial products. Platforms built market integrity mechanisms faster than legal frameworks emerged to govern them. When prediction markets become betting platforms on political events, they fall squarely into gambling law—and gambling law, unlike derivatives regulation, operates on a country-by-country basis. The globalized crypto rails that made Polymarket and Kalshi possible can't easily carry them across borders when national gambling laws diverge.
