The logo and homepage of Polymarket / AFP-Yonhap

Wagers placed on an overseas platform over the outcome of Seoul's mayoral election reached $43.68 million in May — even though such betting is illegal in Korea.

The wager was hardly an isolated incident. Prediction market platforms, which usually operate using stablecoins, allow users to place bets on the outcomes of elections, wars, sporting events and virtually any other matters of public interest. Korea is increasingly part of that trend, with wagers now covering not only Korean politics but also its economy.

On Polymarket, the world's largest prediction market platform, the most popular Korea-related wager as of Tuesday was over how high the iShares MSCI South Korea exchange traded-fund (ETF) would climb during the week of July 20. The contract closes Friday, with $18,067 already bet.

Although it is difficult to determine how many Koreans use the platform, anecdotal accounts suggest that at least some have begun experimenting with it.

One Korean user wrote on an online community that he had tried Polymarket while researching stablecoins and turned $70 into $170 in a single day. He described it as "an incredibly entertaining mix of a casino and a forecasting tool," but warned that its addictive potential meant it was best treated as an occasional diversion.

For South Korean nationals, however, entering that new world may come with legal consequences.

Under Korean law, wagering money online on the outcome of an event is considered illegal gambling. Citizens who place bets on such platforms could face fines of up to 10 million won ($6,785.18).

Still, Polymarket remains accessible in Korea, and with no clear rules governing the new platforms, users can still access the sites as long as they hold dollar-backed stablecoins. The process involves purchasing stablecoins through a cryptocurrency exchange, transferring them to a personal crypto wallet and then depositing them into the platform.

Korea Times graphic by Cho Sang-won

From crypto niche to mainstream business

In an otherwise sluggish crypto market, prediction markets have emerged as one of the few crypto-related services still attracting strong interest.

According to Artemis, a crypto analytics platform, weekly prediction market trading volume reached a record-high $14.4 billion in the third week of June, up from roughly $5 billion or $6 billion at the beginning of the year.

That enthusiasm is now drawing mainstream companies into the market. In May, Robinhood launched Rothera, a prediction market exchange. Meta Platforms is also reportedly developing a prediction market app called Arena.

"Prediction markets have already become a core part of global financial and information infrastructure," said Ryan Yoon, a senior research analyst at Tiger Research.

How prediction markets work

Prediction markets operate through contracts tied to whether an event will occur. Users buy and sell those contracts before the outcome is known.

For example, a typical contract might ask whether the iShares MSCI South Korea ETF will reach $168 during the week of July 20. If a "Yes" contract trades at 73 cents, the market is assigning the outcome an implied probability of roughly 73 percent. If the ETF reaches that price, the contract settles at $1. Otherwise, it becomes worthless.

Prices change continuously with supply and demand, allowing the market to translate collective judgments about future events into real-time probabilities.

A Polymarket contract asks how high the iShares MSCI South Korea ETF will climb during the week of July 20. Screenshot from Polymarket's website

Forecasting tool or gambling platform?

Prediction markets are most established in Western countries, particularly the U.S.

Yoon said there is a significant divide between the industry's growth in the West and the more rigid approaches taken by many Asian regulators.

"At a time when the boundary between technology and finance has largely dissolved, attempts to constrain a new market within older regulatory frameworks face inherent limitations," Yoon said.

Advocates argue that prediction markets operate on borderless digital networks, making them difficult to block completely.

They also contend that prediction markets generate valuable datasets by translating complex political, economic and social questions into quantitative probabilities. They argue that in some cases, those estimates may prove more accurate than traditional forecasting methods.

Opponents, however, say prediction markets can encourage excessive gambling. Unlike Sports Toto, Korea's official sports betting service, many overseas prediction platforms impose no comparable limits on the amount an individual can wager.

Recent cases have also raised concerns about insider trading. In the U.S., a soldier was arrested after allegedly making more than $400,000 from bets related to Nicolás Maduro’s capture, while a software engineer was charged with using inside information to earn $1.2 million from markets tied to Google search rankings.

Korea weighs its response

In Korea, analysts say full-scale liberalization of prediction markets is unlikely under the current regulatory climate, and that any meaningful policy decision would take time. Even relatively mainstream crypto products, such as spot bitcoin ETFs and stablecoins, still lack a clear domestic legal framework.

The Korea Communications Standards Commission said it has begun reviewing Polymarket after receiving a complaint. On July 6, Polymarket submitted materials outlining its position. Given the novel nature of prediction markets, regulators are expected to conduct a cautious legal review.

"We will review the materials and make a final decision on whether restrictions are appropriate," a commission official said.

If restrictions are imposed, Korea would join more than 30 countries — including France, Belgium, Taiwan, Singapore and the Czech Republic — that have blocked access to Polymarket on the grounds that it is an illegal gambling site.