In-depth analysis of prediction market Polymarket and the legal risks involved in its promotion

Introduction

A few days ago, I wrote an article about prediction markets titled “Is Polymarket Gambling? Legal Risks for Chinese Players.” Since then, many friends have reached out to ask me detailed questions. In response, we are conducting a deeper analysis and interpretation of prediction markets, especially focusing on the Polymarket platform, to help everyone understand the legal risks involved and how high they really are.

1. Differences Between Polymarket and Traditional Casinos

In my previous article, I argued that projects on the Polymarket platform could be considered gambling under Chinese mainland law, meaning that Polymarket itself functions like a casino. However, I didn’t delve into how Polymarket’s gameplay differs from traditional casinos.

“Reading about it only scratches the surface,” as Liu, the lawyer, also invested some funds to personally experience Polymarket with an academic mindset. This hands-on experience has given me more insights into Polymarket:

First, unlike traditional gambling sites, Polymarket is deployed on the blockchain (Polygon network). It has no centralized server like a typical gambling website, nor is there a house or bookmaker controlling the outcomes;

Second, in terms of operation, Polymarket relies on real-world event outcomes, which are automatically executed by smart contracts on the blockchain. Users are essentially placing bets against each other. In contrast, traditional casinos (including betting websites) often rely on human dealers or random number generators, with outcomes manipulated or controlled by the house. Casinos are centralized, with opaque fund flows, and the house always has an advantage through setting odds;

Third, their social functions differ significantly. Polymarket aggregates market expectations, which can reflect public predictions with relative or even high precision—serving social functions like providing insights into policy trends. It can be useful for academia, media, and research institutions to gauge public sentiment and probability estimates (especially with large sample sizes). Traditional casinos, however, are purely for entertainment and gambling. From the perspective of mainland China, Polymarket has some positive social value, whereas casinos are considered to have no positive social impact.

That said, I do not encourage everyone to participate in Polymarket. Its binary prediction mechanism still qualifies as gambling under Chinese law, and this classification is unlikely to change. This leads to the second topic: what are the legal risks of promoting Polymarket?

2. Legal Risks of Promoting Polymarket

A quick search shows that several companies or individuals are already promoting Polymarket across different platforms.

While individual players participating in Polymarket face certain risks—mainly that it could be deemed gambling, risking criminal charges for gambling or administrative penalties—the overall risk for players is relatively manageable. However, the legal risks associated with promoting Polymarket are entirely different.

According to the “Opinions on Several Issues Concerning the Application of Law in Handling Cases of Online Gambling Crimes” issued by the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security on August 31, 2010, certain activities may constitute the crime of “organizing gambling” (opening a casino):

• First, acting as an agent for gambling websites and accepting bets, organizing gambling activities via the internet.

• Second, even if the domestic promoters of Polymarket haven’t directly set up the platform, they could still be considered co-conspirators in the crime of “organizing gambling” if they meet the following conditions:

  • Providing internet access, server hosting, network storage, communication channels, advertising, membership development, software development, or technical support services to gambling websites, and charging service fees exceeding 20,000 yuan.

This indicates that promoting Polymarket in mainland China carries far greater legal risks than simply participating as a user. Therefore, Liu advises everyone: do not promote or introduce others to participate in Polymarket.

3. Final Remarks

Although I believe Polymarket has unique social value and can, to some extent, be considered a financial product, due to China’s regulatory policies and the platform’s involvement with multiple sensitive issues—such as gambling (or suspected gambling), virtual currencies, and political sensitivities—I do not recommend deep involvement or promotion of Polymarket.