It's easy to conquer a city, but difficult to govern it: Polymarket wants to establish a presence globally but still has to bow down everywhere

Author: Chloe, ChainCatcher

Last week, the prediction market was shut down in India. Users connecting to polymarket.com only saw the error message "This site can't be reached." The Indian Ministry of Electronics and Information Technology (MeitY) issued a blocking order, requiring domestic internet service providers to cut off access, stating that India has classified the platform as "online gambling," which falls under the completely prohibited category.

On the same day, Bloomberg cited informed sources revealing that Polymarket has appointed local representatives in Japan and is preparing to lobby for the "legalization of prediction markets," aiming to obtain approval from the Japanese government before 2030.

The back-and-forth situation precisely describes Polymarket's predicament; the scale of prediction markets is continuously growing, but regulatory challenges in various countries make progress difficult.

Three Regulatory Paths Reveal How Countries View the Existence of Prediction Platforms

Polymarket's expansion has spread like a virus to various countries due to its "permissionless" approach, a decentralized structure that allows it to reach about 180 countries. However, this is precisely the issue in the eyes of regulators. The lack of identity verification means bypassing anti-money laundering (AML) regulations; not going through traditional financial institutions means bypassing gambling licenses and derivatives regulations.

As of early 2026, Polymarket's own documents list about 33 restricted countries and regions across six continents, and the number increases every couple of months. From the regulatory actions of various countries, they can generally be categorized into a few types.

The first is direct blocking.

India is the latest and most dramatic case. It is based on the "2025 Online Gambling Promotion and Management Act" (PROGA), which was passed by both houses of Congress in August 2025, signed by the president, and officially took effect on May 1, 2026, categorizing prediction markets alongside online gambling as completely prohibited.

It is noteworthy that the execution of this blocking process is anything but clean and straightforward. Polymarket and its competitor Kalshi did not quietly exit after the ban took effect; instead, they continued to allow Indian users to register and trade through "mirror sites" (copies of the original website with a different URL and server). On April 25, MeitY sent a letter to VPN operators warning users still accessing "illegal and blocked prediction markets and online gambling platforms," but this warning did not deter user enthusiasm. It wasn't until the formal invocation of the blocking order under Article 69A of the Information Technology Act that Polymarket truly went dark in India.

Even so, India remains one of Polymarket's largest user bases, with the public continuing to use VPNs and overseas cryptocurrency channels to bypass ISP blocks; however, accessing or investing from India remains illegal.

Brazil's blocking is even more drastic. At the end of April 2026, Brazil's National Monetary Council (CMN) issued Resolution No. 5,298, prohibiting derivative contracts based on non-economic events (sports, politics, elections, culture, entertainment), blocking about 27 to 28 prediction platforms, including Polymarket and Kalshi, enforced by the telecommunications regulator Anatel, which closed the domains.

Finance Ministry official Dario Durigan described these platforms as "gambling disguised as financial instruments" and attributed part of the rising household debt to unregulated online gambling. Brazil thus became the third Latin American country to restrict prediction markets, following Argentina and Colombia.

Ukraine's ban carries special moral considerations. In December 2025, Ukraine implemented a nationwide block citing the platform's acceptance of bets related to the Russia-Ukraine war. In November 2025 alone, there were 97 bets related to the Russia-Ukraine war on the platform, totaling $96.8 million. Betting on the timing of city falls during an ongoing war became an intolerable reason for regulators.

The second is to attack with existing licenses and derivatives regulations.

Europe is a hub for this approach. Although the EU has the MiCA crypto asset framework, it has not set clear rules for binary event contracts, so each member state invokes its own gambling and financial laws.

The French National Gambling Authority (ANJ) deemed Polymarket an unlicensed operator, leading the platform to adopt a "view-only" mode for French IPs, where users can only view the market but cannot trade; Portugal's SRIJ issued a nationwide ban in early 2026, claiming that betting on political events is inherently illegal; the Dutch Gambling Authority (KSA) issued a penalty order against Polymarket in January, requiring it to cease operations within four weeks or face weekly fines of €420,000, capped at €840,000; Belgium, Poland, Switzerland, and Hungary have also placed it on their blocking or blacklist.

The UK faces a double hurdle; without a UK gambling license and with the Financial Conduct Authority (FCA) prohibiting the sale of crypto derivatives to retail investors, Polymarket proactively geo-blocked all UK residents. The Australian Communications and Media Authority (ACMA) determined that prediction markets fall under unlicensed gambling and required ISPs to implement a complete block based on the Interactive Gambling Act of 2001.

The third is a middle path, establishing a new framework to incorporate it into the system.

Brazil is the most typical example of a "two-sided" approach: it banned overseas decentralized platforms open to the general public that offer betting on sports and political events (i.e., Polymarket, Kalshi), but it did not sweep the entire category out of the door. Instead, it authorized the local B3 exchange through the securities regulator CVM to launch regulated binary event derivatives, initially targeting financial assets like the dollar, Ibovespa index, and Bitcoin, and only open to professional investors with over 10 million reais in financial assets.

In other words, Brazil does not want to eliminate such products but rather reclaim them from overseas casinos, repackaging them within its securities system to sell only to those who can bear the risks.

Dubai has taken a different "threshold" approach. It has not issued bans against anyone but established a clear licensing system through the Virtual Assets Regulatory Authority (VARA). Any operator wishing to legally provide services to local residents must first obtain a VASP (Virtual Asset Service Provider) license and undergo strict operational audits and anti-money laundering controls.

The commonality of these two approaches is that they do not treat prediction markets as mere gambling to be eradicated but require them to shed their decentralized guise and adopt a regulated identity to gain entry.

Does Polymarket Have a Strategy for Key Markets?

For key markets like the United States and Japan, Polymarket's expansion can be described as a pragmatic approach tailored to local conditions and negotiated on a country-by-country basis.

In the United States, Polymarket is taking the route of buying back its legal identity. In 2022, it was fined $1.4 million by the Commodity Futures Trading Commission (CFTC) and expelled from the U.S. market, needing to obtain a license to return. In July 2025, it acquired QCEX, a derivatives exchange and clearinghouse holding company with a CFTC license, for $112 million, paving the way for compliant re-entry.

In November of the same year, the CFTC officially allowed it to operate as a regulated intermediary platform. However, the cost is that U.S. users can no longer use anonymous decentralized wallets; they must access through the "Polymarket US" portal, undergo strict KYC, and place orders through approved brokers. It can be said that Polymarket's legally purchased identity comes at the cost of sacrificing anonymity and decentralization.

Next is bringing capital into the system. In October 2025, the New York Stock Exchange (ICE) announced an investment of up to $2 billion in Polymarket, with a post-investment valuation of about $9 billion. However, what ICE is interested in is the event probability signals generated by crowd trading on the platform, which will become the exclusive distributor of this data to global institutional investors. For Polymarket, it is selling its most valuable asset into Wall Street's data pipeline.

Returning to Asia, the pace in Japan is different. Polymarket has appointed local representatives in Japan and is preparing to lobby for the "legalization of prediction markets," led by Mike Eidlin, who is currently the head of the Solana ecosystem DeFi project Jupiter in Japan.

Polymarket sees Japan as a big cake, and there are actually data to follow; as of June 2025, the on-chain value in Japan has grown by 120% annually, making it the fastest-growing market in the Asia-Pacific region. Additionally, Japan already has a deep culture of speculative trading, from foreign exchange and horse racing to pachinko, making it a "wealthy and trading-loving" market.

However, gambling is a complete minefield in the country's laws. Japan's Penal Code stipulates that habitual gambling can result in up to three years of imprisonment, and operators of gambling businesses can face up to five years, with only a few exceptions for government-authorized horse racing and public lotteries. Even the pachinko industry, worth about 16 trillion yen (approximately $10 billion), has circumvented the gambling ban through a convoluted design that requires "exchanging prizes for cash at another store."

In such an environment, prediction markets currently do not have a clear legal category to fit into. This is also why Polymarket has set its sights on 2030. Particularly, Japan's regulatory process is known for its extreme caution, and any new product category involving DeFi infrastructure and crypto collateral markets is often reviewed over the course of years.

According to informed sources, Polymarket plans to collaborate with Japanese institutions and companies for several years to gradually establish a scalable framework, positioning this as a long-term institutional project rather than an opportunistic rush. During the waiting period for approval, it has chosen to pave the way through community operations: Polymarket's Japanese X account has accumulated over 53,000 followers, maintaining its presence by sharing news.

An industry advocate described that Japan is entering a phase where "prediction data may become a valuable new layer in financial and media infrastructure," which is almost a Japanese version of ICE's business model.

Conclusion

Zooming out from Polymarket reveals that this "easy to attack, hard to govern" tug-of-war is playing out on a scale that encompasses the entire industry, with stakes getting higher.

Despite the heavy judicial and compliance risks, the overall trading volume of prediction markets is experiencing explosive growth. A research report from Wall Street brokerage Bernstein pointed out that global prediction market trading volume reached $51 billion last year, and it is expected to climb to $240 billion by 2026, with a potential to surpass $1 trillion by 2030.

These platforms are evolving from niche gambling to a vast information market spanning finance, geopolitics, and macroeconomics. However, regardless of how large the scale becomes, Polymarket faces the same challenge in every market: how to embed a system born from decentralization and permissionless access into regulatory frameworks predicated on sovereignty, licensing, and consumer protection.

For prediction markets, the real hurdle has never been about scaling up but proving their eligibility to remain in every regulatory and political struggle.