It's easy to conquer a city, but difficult to govern it: Polymarket wants to establish a presence globally but must 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 Ministry of Electronics and Information Technology (MeitY) issued a blocking order, requiring domestic internet service providers to cut 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 accurately describes Polymarket's situation; the scale of prediction markets is continuously growing, but regulatory challenges in various countries make it difficult to progress.

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

Polymarket's expansion has spread to various countries like a virus 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 month or two. 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 worth noting that the execution of this blockade was not 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 different URLs and servers). On April 25, the Ministry of Electronics and Information Technology sent a letter to VPN operators, warning users still accessing "illegal and blocked prediction markets and online gambling platforms," but this warning did not stop user enthusiasm. It was only when the blocking order invoking Section 69A of the Information Technology Act was formally implemented that Polymarket truly went dark in India.

Even so, India remains one of Polymarket's largest user bases, with people continuously using VPNs and offshore cryptocurrency channels to bypass ISP blocks; however, accessing or investing from India is still illegal.

Brazil's blockade was even more drastic. At the end of April 2026, the National Monetary Council (CMN) of Brazil 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 shut down 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 had special moral considerations. In December 2025, Ukraine conducted a nationwide blockade on the grounds that the platform accepted bets on events 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 a city's fall during an ongoing war became an intolerable reason for regulators.

The second is to clamp down using existing licenses and derivative regulations.

Europe is the gathering place for this approach. Although the EU has the MiCA crypto asset framework, it does not have clear rules for binary event contracts, so each member state invokes its own gambling and financial laws to handle them.

The French National Gambling Authority (ANJ) deemed Polymarket an unlicensed operator, leading the platform to adopt a "view-only" mode for French IPs, allowing users to view the market but not trade; Portugal's SRIJ issued a nationwide ban in early 2026, stating that betting on political events is essentially 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, with a cap of €840,000; Belgium, Poland, Switzerland, and Hungary also listed it on their block or blacklist.

The UK faced dual obstacles; lacking 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 them into the system.

Brazil is the most typical example of "two sides of the same coin": it banned 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 offshore casinos, repackaging them within its securities system to sell only to those who can bear the risks.

Dubai has taken a different approach by setting thresholds. It did not issue 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, such as 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 has taken 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 the legal identity Polymarket bought back was achieved by 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 data to support this. As of June 2025, on-chain value in Japan has grown by 120% annually, making it the fastest-growing market in the Asia-Pacific region; coupled with Japan's deep-rooted speculative trading culture, from foreign exchange to horse racing to pachinko, it is 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 lead to a maximum of three years in prison, and those operating gambling businesses can face up to five years, with only a few exceptions like 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, there is currently no clear legal category for prediction markets. 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 stage where "prediction data may become a valuable new layer in financial and media infrastructure," which is almost a Japanese version of the ICE business model.

Conclusion

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

Despite the heavy judicial and compliance risks, the overall trading volume of prediction markets is showing 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 exceed $1 trillion by 2030.

These platforms are evolving from niche gambling into a vast information market spanning finance, geopolitics, and macroeconomics. However, regardless of how large the scale becomes, Polymarket faces the same challenge in each market: how to embed a system born from decentralization and permissionless access into regulatory frameworks that are 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 challenge and political struggle.