Prediction markets are putting pressure on Asia’s largest economies, even as local gambling laws impose strict restrictions on betting activities.
Asia represents a combination of scale, lively retail participation and restricted local alternatives too massive to ignore despite regulatory risks.
This is a similar pattern seen in crypto, where technology has evolved faster than regulations and licensing frameworks, prompting exchanges to enter markets before clear rules are in place.
Like many startups, the most significant in the industry adopted the “better to ask for forgiveness than for permission” approach on the scale.
Polymarket, one of the fastest growing platforms, already records over $1 billion in weekly turnover. Chinese language support has been introduced, while recent entrants like PredicXion are focusing on local events to drive adoption.
But beneath the surface, the region is fragmented and legally intricate, with access, language and regulation not always matching the industry’s global ambitions.
Prediction markets have hit local barriers in Asia
Three Asian countries – China, Japan and India – were among the world’s five largest economies in terms of gross domestic product in 2024, According to to the World Bank.
India and China do not have specific frameworks for blockchain-based prediction markets, but both maintain restrictive environments around cryptocurrencies. India imposes high taxes, while China enforces a total ban on activities such as trading and mining.
South Korea also ranks 12th among the world’s largest economies and is often cited as one of the most lively retail cryptocurrency markets. The South Korean won is consistently the leading currency in terms of global fiat trading volume, According to to Kaiko.
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“Prediction markets could be a very big opportunity in the Korean market,” Heechang Kang, co-founder of research firm Four Pillars, told Cointelegraph. “But I think a lot of forecast markets are having a hard time gaining an audience because their forecasts are mainly focused on Western themes.”
Japan faces similar localization challenges, where language and a lack of region-specific events limit wider adoption.
This loophole has created a gateway for Asian platforms. Region-based prediction markets like PredicXion attempt to localize content by focusing on region-specific events.
However, its founder and CEO Andy Cheung said local gambling laws in key markets remained a “major issue”.
“In these jurisdictions, authorities often classify activities involving placing bets on uncertain outcomes as gambling, which is severely restricted or completely prohibited outside of strictly controlled state lotteries or exceptions,” Cheung told Cointelegraph.
The argument that prediction markets and gambling are two different things
In China, online gambling is strictly prohibited and access to platforms such as Polymarket is highly restricted. Some users bypass control using VPN to bypass the country’s Internet censorship, commonly known as the Great Firewall, but this does not eliminate the risk.
“Many people in the industry are aware of the strict regulatory environment in these regions, and aggressive user acquisition in these regions carries risks not only to operators, but potentially to users themselves under local laws that may treat participation as illegal gambling,” Cheung said.
Regulators in South Korea and Japan have not yet directly addressed blockchain-based prediction markets, and most platforms remain available. However, both countries maintain strict restrictions on gambling.
In South Korea, most forms of gambling are prohibited for residents, apart from a narrow set of state exemptions, and the law also covers the operate of foreign platforms. Authorities actively pursued illegal online betting operators and, in some cases, users themselves.
Japan takes a similarly restrictive approach, with gambling generally illegal outside regulated channels such as lotteries, horse races and other public betting systems.
Related: Why are yen stablecoins key to Japan’s crypto ambitions?
This leaves prediction markets in a gray area where access is possible but the legal classification remains unresolved.
“Some people say that prediction markets are no different from gambling. I would disagree,” Jaewon Kim, a researcher at Four Pillars who author in the company’s forecast markets report, Cointelegraph said.
He said the difference is the type of production they produce. Gambling is largely a closed loop in which users place bets against the house and the results have little meaning beyond the game itself. Meanwhile, prediction markets aggregate expectations about real-world events.
“During the 2024 U.S. presidential election, prediction markets gained significant popularity and in some cases were more accurate than polls and expert forecasts,” Kim said. “This ability to reflect collective expectations is what sets them apart and gives them news value beyond mere betting.”
Legal classification will determine the future of prediction markets in Asia
Several forecasting platforms are entering Asia with the same playbook that defined earlier phases of cryptocurrency growth, focusing on demand first and leaving regulatory clarity until later. The region offers a occasional combination of scale, retail participation and underdeveloped local alternatives.
This tension is already apparent on the pitch. Platforms can reach users through language support and workarounds such as VPNs, but neither solves the fundamental problem of classification. Major Asian markets also have some of the strictest legal conditions for anything resembling gambling.
Local players are starting to test that boundary by tailoring products to regional audiences, although Cheung said platforms like PredicXion try to avoid “highly restricted markets.” Most regions have not yet determined whether prediction markets constitute gambling.
The industry’s argument that prediction markets are separate adds another layer of uncertainty. If they are treated as information markets that aggregate real-world expectations, they may eventually find a regulatory path similar to financial instruments.
Otherwise, they risk being absorbed into the existing gambling framework, which leaves little room for growth.
