Author: Lawyer Liu Zhengyao

Introduction

A few days ago, the author wrote an article about prediction markets titled “Is Polymarket a form of gambling? Do Chinese players face legal risks?”, after which many friends contacted me to inquire about various details. In light of this, we will conduct an in-depth analysis and interpretation of prediction markets, especially the Polymarket platform, and analyze the legal risks involved and how significant they are.

1. Differences Between Polymarket and Traditional Casinos

In the previous article, the author argued that the projects on the Polymarket platform are classified as gambling under mainland Chinese law, meaning that the Polymarket platform itself operates as a casino. However, I did not delve into how the gameplay of Polymarket differs from that of traditional casinos.

“Knowledge gained from books is always shallow.” Lawyer Liu also invested some USDC to personally experience Polymarket with an academic experimental mindset, gaining more insights and understanding of Polymarket:

Firstly, unlike traditional gambling websites, Polymarket is deployed on a blockchain (Polygon chain) network, lacking centralized servers typical of gambling sites, and there is no dealer manipulation as in physical casinos.

Secondly, in terms of operational mechanisms, Polymarket relies on the outcomes of real-world events, executed automatically by blockchain smart contracts, making user interactions more akin to “betting” against each other; whereas traditional casinos (including gambling websites) often use human-operated gaming tools (like dealers dealing cards) to randomly generate results, operating under a centralized management model where the flow of funds is opaque, and players are betting against the house, which can set odds, always maintaining an advantage.

Finally, the social functions of the two are not the same. Polymarket aggregates market expectations, which can relatively clearly (even precisely) reflect public predictive information, serving certain social functions, such as providing trend references for specific policies; however, traditional casinos are purely for entertainment and gambling. Polymarket can, to some extent, assist academia, media, and research institutions in conducting social research (when the sample size is large enough) and understanding group expectations and probability pricing, but traditional casinos do not have any significant positive effects. According to mainstream views in mainland China, Polymarket has certain positive energy, while casinos have none.

However, this does not mean the author encourages everyone to play Polymarket. The binary prediction mechanism on Polymarket still falls under gambling behavior according to Chinese law, and this classification is difficult to change. This leads us to the second topic of this article: what risks are associated with promoting Polymarket.

2. Legal Risks of Promoting Polymarket

A simple search reveals that multiple companies or individuals are currently promoting Polymarket on various platforms.

While ordinary players face certain risks when participating in Polymarket, as it may be classified as gambling, players could potentially face severe legal risks, such as being charged with gambling offenses, or lighter administrative penalties for participating in gambling. However, overall, these risks are relatively manageable. The nature of promoting Polymarket is entirely different.

According to the “Opinions on Several Issues Concerning the Application of Law in Handling Online Gambling Criminal Cases” issued by the “Two Highs and One Department” on August 31, 2010, the following situations may constitute the crime of operating a casino:

First, acting as an agent for a gambling website and accepting bets, organizing gambling activities using the internet.

Second, even if companies or individuals promoting Polymarket domestically have not personally established the Polymarket platform, if they meet the following conditions, they could potentially be considered accomplices in the crime of operating a casino: “Providing internet access, server hosting, network storage space, communication transmission channels, advertising, member development, software development, technical support, etc., for gambling websites, and charging service fees exceeding 20,000 yuan.”

It is evident that the act of promoting Polymarket faces far greater legal risks in mainland China than merely participating in Polymarket, so Lawyer Liu advises everyone not to promote or introduce others to participate in Polymarket. Criminal liability.

3. Final Thoughts

Although the author believes that Polymarket has its unique social value and can even be considered a financial product to some extent, due to China's regulatory policies and the multiple pitfalls associated with the Polymarket platform, such as gambling (or at least suspected gambling), virtual currencies, and political sensitivity, the author does not recommend deep participation, especially not promoting Polymarket.

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