Prediction Markets Are Testing Legal Limits in Strict Asian Markets

Prediction markets are pushing into Asia’s largest economies, even as local gambling laws place strict limits on betting activities.

Asia represents a combination of scale, active retail participation and limited local alternatives, making it too large to ignore despite regulatory risks.

That’s a similar pattern seen in crypto, where technology moved faster than regulation and licensing frameworks, prompting exchanges to enter markets before clear rules were in place. 

Like many startups, the industry’s heavyweights adopted the “better to ask for forgiveness than permission” approach to scale.

Polymarket, one of the fastest-growing platforms, is already recording over $1 billion in weekly volume. It has introduced Chinese-language support, while newer entrants like PredicXion are focusing on local events to drive adoption.

But beneath the surface, the region is fragmented and legally complicated, where access, language and regulation don’t always align with the industry’s global ambitions.

Prediction markets hit local barriers in Asia

Three Asian countries — China, Japan and India — ranked among the world’s five largest economies by gross domestic product in 2024, according to the World Bank.

India and China do not have specific frameworks addressing blockchain-based prediction markets, but both maintain restrictive environments around crypto. India imposes heavy taxation, while China enforces an outright ban on activities such as trading and mining.

South Korea also ranks among the world’s largest economies at 12th and is often cited as one of the most active retail crypto markets. The South Korean won is a consistent top-two currency by global fiat trading volume, according to Kaiko.

Related: How AI agents can reshape arbitrage in prediction markets

“Prediction markets could be a very big opportunity in the Korean market,” Heechang Kang, co-founder at research company Four Pillars, told Cointelegraph. “But I think many prediction markets are having difficulty capturing audiences because their predictions are mostly focused on Western themes.”

Japan faces similar localization challenges, where language and a lack of region-specific events limit broader adoption.

That gap has created an opening for Asia-based platforms. Prediction markets originating from the region, such as PredicXion, are attempting to localize content by focusing on region-specific events.

However, its founder and CEO Andy Cheung said local gambling regulations in key markets remain a “significant concern.”

“In these jurisdictions, authorities often classify activities involving wagering on uncertain outcomes as gambling, which is heavily restricted or outright prohibited outside of tightly controlled state-run lotteries or exceptions,” Cheung told Cointelegraph.

The argument that prediction markets and gambling are different

In China, online gambling is strictly prohibited, and access to platforms such as Polymarket is largely restricted. Some users bypass controls using VPNs to get around the country’s internet censorship, commonly known as the Great Firewall, but that does not eliminate risk.

“Many in the industry are aware of the strict legal environment in these regions, and aggressive user acquisition there does carry risks, not just for operators, but potentially for users themselves under local laws that can treat participation as illegal gambling,” Cheung said.

Regulators in South Korea and Japan have yet to directly address blockchain-based prediction markets as well, and most platforms remain accessible. Both countries, however, maintain strict limits on gambling.

In South Korea, most forms of gambling are prohibited for locals outside a narrow set of state-run exceptions, and the law extends to participation on overseas platforms. Authorities have actively pursued illegal online betting operators and, in some cases, users themselves.

Japan takes a similarly restrictive approach, where gambling is generally illegal outside regulated channels such as lotteries, horse racing and other public betting systems.

Related: Why yen stablecoins are key to Japan’s crypto ambitions

That leaves prediction markets in a gray zone, where access is possible but legal classification remains unresolved.

“Some argue that prediction markets are no different from gambling. I would dispute that,” Jaewon Kim, a researcher at Four Pillars who authored the company’s prediction markets report, told Cointelegraph.

He said the distinction lies in the type of output they produce. Gambling is largely a closed loop where users bet against the house, with outcomes that have little relevance beyond the game itself. Meanwhile, prediction markets aggregate expectations about real-world events.

“During the 2024 US presidential election, prediction markets gained significant traction and, in some cases, were more accurate than polls or expert forecasts,” Kim claimed. “That ability to reflect collective expectations is what sets them apart and gives them informational value beyond simple wagering.”

Legal classification will determine prediction markets’ future in Asia

Several prediction platforms are moving into Asia with the same playbook that defined earlier phases of crypto growth, targeting demand first and leaving regulatory clarity for later. The region offers a rare mix of scale, retail participation and underdeveloped local alternatives.

That tension is already visible on the ground. Platforms can reach users through language support and workarounds like VPNs, but none of those solve the underlying issue of classification. Major Asian markets also have some of the most restrictive legal environments for anything that resembles gambling.

Local players are beginning to test that boundary by tailoring products to regional audiences, though Cheung said platforms like PredicXion are trying to avoid “heavily restricted markets.” Most regions have yet to determine whether prediction markets fall under gambling.

The industry’s argument that prediction markets are distinct adds another layer of uncertainty. If they are treated as information markets that aggregate real-world expectations, they may eventually find a regulatory pathway similar to financial instruments.

If not, they risk being absorbed into existing gambling frameworks that leave little room for expansion.

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