Author: Chloe, ChainCatcher
Last week, the prediction market went dark in India. Users connecting to polymarket.com would only see a "This site can't be reached" error message. The Indian Ministry of Electronics and Information Technology (MeitY) had issued a blocking order, requiring domestic internet service providers to cut off access. The reason is that India has classified the platform as "online money gaming," a completely prohibited category.
On the same day, Bloomberg reported, citing informed sources, that Polymarket had appointed a local representative in Japan and was preparing to lobby for the "legalization of prediction markets," with the goal of obtaining Japanese government approval by 2030.
In this dance of advance and retreat lies an accurate description of Polymarket's situation. While the prediction market continues to grow, regulatory hurdles in various countries make its progress difficult.
Three Regulatory Pathways Reveal How Countries View the Existence of Prediction Platforms
Polymarket's expansion has spread virally to various countries due to its "permissionless" onboarding approach. This decentralized architecture allows it to reach about 180 countries, but this is precisely what regulators in those countries see as the problem. No identity verification means bypassing anti-money laundering (AML) norms; operating outside traditional financial institutions means bypassing gaming licenses and derivatives regulations.
By early 2026, Polymarket's own documents listed approximately 33 restricted countries and regions, spanning six continents, and the number grew every month or two. Looking at regulatory actions by various countries, they can roughly be categorized into several types.
The first type is direct blocking.
India is the latest and most dramatic case. Its action is based on the "Promotion and Management of Online Gaming Act, 2025" (PROGA). This law was passed by both houses of parliament and signed by the president in August 2025, officially taking effect on May 1, 2026, categorizing prediction markets alongside online money gaming as completely prohibited.
It is worth noting that the execution of this blockade was anything but clean and swift. 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 the same content but hosted on different URLs). The Indian Ministry of Electronics and Information Technology wrote to VPN operators on April 25, warning that users were still accessing "illegal and already blocked prediction market and online gaming platforms," but this warning still couldn't curb user enthusiasm. It wasn't until the formal blocking order citing Section 69A of the Information Technology Act was implemented that Polymarket truly went dark in India.
Even so, India remains one of Polymarket's largest user bases. People continue to use VPNs and offshore cryptocurrency channels to bypass ISP blockades, though accessing or funding the platform from India remains illegal.
Brazil's blockade is even more sweeping. In late April 2026, the Brazilian 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 at once, including Polymarket and Kalshi, with the telecommunications regulator Anatel executing domain closures.
Treasury official Dario Durigan described these platforms as "gambling disguised as financial instruments" and partially attributed rising household debt to unregulated online gaming. Brazil thus became the third Latin American country, after Argentina and Colombia, to restrict prediction markets.
Ukraine's ban carries special moral considerations. In December 2025, Ukraine imposed a nationwide blockade on the platform, citing its acceptance of bets on events related to the Russia-Ukraine war. In November 2025 alone, there were 97 bets on the Russia-Ukraine war on the platform, totaling $968 million. Betting on the timing of a city's fall in an ongoing war became a reason regulators could not tolerate.
The second type involves using existing licensing and derivatives regulations to clamp down.
Europe is the gathering place for this approach. Although the EU has the MiCA crypto-asset framework, it has not established clear rules for binary event contracts. As a result, member states apply their own national gaming and financial laws.
France's National Gaming Authority (ANJ) identified Polymarket as an unlicensed operator, leading the platform to switch French IPs to a "view-only" mode, where users can only view markets but not trade; Portugal's SRIJ issued a nationwide ban in early 2026, citing the inherent illegality of betting on political events; the Dutch Gaming Authority (KSA) issued an enforcement order in January, requiring Polymarket to cease operations within four weeks or face a weekly fine of €420,000, with a maximum of €840,000; Belgium, Poland, Switzerland, and Hungary have also included it on their blocklists or blacklists.
The UK faced a double barrier: lacking a UK gaming license, and the Financial Conduct Authority (FCA) banning the sale of crypto derivatives to retail customers. Polymarket simply proactively geoblocked all UK residents. The Australian Communications and Media Authority (ACMA), after investigation, determined that prediction markets constitute unlicensed gaming and, under the "Interactive Gambling Act 2001," required ISPs to implement a complete blockade.
The third type is a middle path: establishing a new framework to bring it into the system.
Brazil is the most typical example of "two sides of the same coin." It banned those decentralized, open-to-the-general-public platforms hosting markets on sports and political events from overseas (i.e., Polymarket, Kalshi). But it didn't sweep the entire product category out the door. Instead, it turned around and authorized the domestic B3 exchange through the securities regulator CVM to launch regulated binary event derivatives. The initial targets are locked to financial instruments like the US dollar, the Ibovespa index, and Bitcoin, and are only open to professional investors with financial assets exceeding 10 million Brazilian Reais.
In other words, Brazil doesn't want to eliminate this type of product; it wants to take it back from overseas gambling houses and repackage it as a product within its own securities system, sold only to financial entities that can bear the risk.
Dubai takes another "threshold-setting" approach. It hasn't issued any specific ban. Instead, through the Virtual Assets Regulatory Authority (VARA), it has established a clear licensing regime. Any operator wanting to legally serve local residents must first obtain a VASP (Virtual Asset Service Provider) license and pass 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. Instead, they demand that it shed its decentralized shell and put on a regulated identity before being allowed entry.
Does Polymarket Have a Strategy for Key Markets?
For key markets like the US and Japan, one could say Polymarket's expansion is a pragmatic, case-by-case, country-by-country negotiation approach.
In the United States, Polymarket took the route of paying to buy back legal status. In 2022, it was fined $1.4 million by the Commodity Futures Trading Commission (CFTC) and expelled from the US market. To return, it needed to obtain a license. In July 2025, it acquired QCEX, a holding company for a derivatives exchange and clearinghouse with a CFTC license, for $112 million, paving the way for a compliant return.
In November of the same year, the CFTC officially granted permission for it to operate as a regulated intermediary platform. But the cost was that US users could no longer use anonymous decentralized wallets; they had to go through the "Polymarket US" portal, pass strict KYC, and place orders via approved brokers. Essentially, Polymarket bought back its legal status by sacrificing anonymity and decentralization.
Next was bringing capital into the system. In October 2025, the New York Stock Exchange's parent company, ICE, announced an investment of up to $2 billion in Polymarket, valuing the company at around $9 billion post-investment. But what ICE was eyeing was the platform's event probability signals generated by crowd trading, and it would become the exclusive distributor of this data to global institutional investors. For Polymarket, this meant selling its most valuable asset into Wall Street's data pipeline.
Back in Asia, Japan represents a different tempo of progress. Polymarket has already appointed a local representative in Japan and is preparing to lobby for the "legalization of prediction markets." Leading this effort is Mike Eidlin, currently the Japan lead for the Solana ecosystem DeFi project Jupiter.
Polymarket's interest in the Japanese pie is somewhat traceable in the data. As of June 2025, on-chain value in Japan grew 120% year-on-year, making it the fastest-growing market in the entire Asia-Pacific region. Combined with Japan's deep-rooted culture of speculative trading, spanning forex, horse racing, and pachinko, it's a market that is both "wealthy and loves to trade."
However, gambling is a major legal minefield in the country. Japan's Penal Code stipulates that habitual gambling can lead to up to three years imprisonment, and operating a gambling business can lead to up to five years. Only a few exceptions like government-authorized horse racing and public lotteries are allowed. Even the pachinko industry, with a scale of about 16 trillion yen (approximately $100 billion), relies on a convoluted design where "exchanging prizes for cash must be done at a separate shop" to circumvent the gambling prohibition.
In such an environment, prediction markets currently do not have a clear legal category in which to be placed. This is why Polymarket has set its target for 2030. Japan's regulatory processes are known for being extremely cautious, and any review of new product categories involving DeFi infrastructure and crypto-collateralized markets often takes years.
According to informed sources, Polymarket plans to collaborate with Japanese institutions and corporations for several years to gradually build a scalable framework. This is positioned as a long-term institutional project, not an opportunistic rush. While waiting for approval, it has chosen to pave the way through community operations first: Polymarket's Japanese X account has already accumulated over 53,000 followers, maintaining a presence by sharing news.
An industry advocate described Japan as entering a phase where "prediction data could become a valuable new layer in financial and media infrastructure," which is almost the Japanese version of the ICE business model.
Conclusion
Zooming out from Polymarket, we find that this tug-of-war of "conquering is easy, governing is hard" is playing out across the entire industry, and the stakes are getting higher.
Despite numerous legal and compliance risks, the overall transaction volume of prediction markets is experiencing explosive growth. A research report by Wall Street brokerage Bernstein notes that global prediction market trading volume reached $51 billion last year and is expected to climb to $240 billion in 2026, potentially surpassing the $1 trillion mark by 2030.
These platforms are evolving from niche betting pools into vast information markets spanning finance, geopolitics, and macroeconomics. But no matter how large the scale becomes, Polymarket faces essentially the same challenge in each market: how to embed a system born of decentralization and permissionlessness into regulatory frameworks built on the premise of sovereignty, licensing, and consumer protection.
For prediction markets, the real hurdle has never been scaling up; it's proving, within each regulatory framework and each political struggle, that they deserve to stay.
