Table of Contents
Researcher
The Korean National Police Agency recently announced that it is investigating domestic users of Polymarket, the world's largest prediction market platform, on allegations of illegal gambling. The investigation appears to have been triggered by the recent prediction markets surrounding the June 3 local elections, during which Korean users were reportedly wagering millions to tens of millions of dollars on specific candidates.
If prediction markets are illegal and constitute gambling, and therefore their users should be regulated and punished, can tokenization platforms pursuing the vision of "tokenizing every possible asset" truly remain outside the scope of this logic?
1. Prediction markets are, at least under current Korean law, gambling.
Prediction markets, including platforms such as Polymarket, can reasonably be viewed as falling within the realm of gambling. Under current Korean law, with the exception of Sports Toto operated by the Korea Sports Promotion Foundation, wagering money or other items of economic value through betting platforms is generally considered illegal.
Let us first look at the dictionary definition. When determining whether a particular activity constitutes gambling, we typically consider three factors: (1) whether money or something of economic value is staked, (2) whether the outcome is uncertain and involves an element of chance, and (3) whether a profit or loss is realized depending on the outcome.
By these standards, prediction markets can be classified as gambling both from a legal perspective and according to the ordinary dictionary definition of the term.
2. Then what about tokenization?
I do not view prediction markets as a completely separate domain unrelated to tokenization. Rather, I believe prediction markets share the same philosophical foundation as tokenization: the idea of making rights, risks, and economic exposures tradable.
If the ultimate vision of tokenization is to make all assets easier to trade by representing them on-chain, can we really say that such markets are entirely free from speculative or gambling-like characteristics?
This argument does not even require us to go as far as tokenization. Futures trading, options trading, and investing in politically themed stocks all contain significant speculative elements.
If Korean users of Polymarket are investigated and punished for participating in prediction markets related to the June 3 local elections, why are investors speculating on election-related theme stocks not subject to the same treatment?
More broadly, if prediction markets are considered illegal because they are speculative in nature, then where do we draw the line going forward? Which assets should be eligible for tokenization, and which should not?
Ultimately, this discussion is not merely about prediction markets. It raises a much broader question: what kinds of rights, risks, and future outcomes should society recognize as tradable assets?
3. Dynamic technology, stagnant legal frameworks
The world is changing rapidly. Every month we encounter new AI models, and blockchain technology continues to transform the way we consume information, interact with markets, and exchange value.
In contrast, the legal systems that underpin our societies remain largely rooted in frameworks that were created before many of these technologies even existed. This is not a uniquely Korean problem, but I believe Korea remains more conservative than many other advanced economies, including the United States.
In the United States, prediction markets are not merely legal; they are increasingly viewed as a legitimate technological innovation. Major media outlets routinely reference prediction markets as one of several indicators of public sentiment, while leading venture capital firms continue to invest heavily in the sector. Prediction market platforms are already generating meaningful revenue and attracting significant user traffic.
Against this backdrop, the question facing Korea becomes increasingly important: what direction should the country choose?
Korea has traditionally taken a defensive approach. There are no exceptions. There are countless reasons that can be given for maintaining the status quo, and one could probably list thousands more.
But even if there are countless reasons not to do something, shouldn't we reconsider if there is even one compelling reason why we must?
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