In-depth analysis of the prediction market Polymarket and the legal risks involved in its promotion.

Introduction

A few days ago, the author wrote an article about prediction markets, "Is Polymarket Gambling? Are There Legal Risks for Chinese Players?" Afterwards, many friends contacted me to inquire about various details. Therefore, we will conduct another in-depth analysis and interpretation of prediction markets, especially the Polymarket platform, and analyze the legal risks involved, and how high they are.

I. Differences between Polymarket and Traditional Casinos

In the previous article, the author argued that projects on the Polymarket platform are considered gambling under Chinese mainland law, thus making the Polymarket platform itself a casino. However, I did not elaborate on the specific differences between Polymarket's gameplay and that of traditional casinos.

"What you learn from books is never enough," and Attorney Liu, having also invested some money in Polymarket and experienced it firsthand with an academic experimental mindset, gained a deeper understanding of it: First, unlike traditional gambling websites, Polymarket is deployed on a blockchain (Polygon Chain) network, without the centralized servers of gambling websites or the manipulation of real-world casinos; Second, in terms of its operating mechanism, Polymarket relies on the occurrence and outcome of real-world events, automatically executed by blockchain smart contracts, making it more like a "bet" between users; while traditional casinos (including gambling websites) rely more on human manipulation of gambling tools (such as dealers dealing cards) to randomly generate results. Casinos operate under a centralized management model, with opaque fund flows, and players bet against the casino, which can set odds, giving the house an advantage; Finally, their social functions are different. Polymarkets, by aggregating market expectations, can reflect public forecast information relatively clearly (even accurately), possessing certain social functions, such as providing trend references for certain policies; however, traditional casinos are purely for entertainment and gambling. Polymarkets can, to some extent, help academia, media, and research institutions conduct social research (when the sample size is large enough) and understand group expectations and probability pricing, but traditional casinos do not have any significant positive effects. According to mainstream opinion in mainland China, polymarkets have some positive energy, but casinos have absolutely no positive energy. However, this does not mean the author encourages everyone to play on polymarkets. The binary prediction mechanism on polymarkets still falls under the category of gambling under Chinese law, and this classification is difficult to change. This leads to the second topic of this article: what are the risks of promoting polymarkets? II. Legal Risks of Promoting Polymarkets A simple search reveals that multiple companies or individuals are already promoting polymarkets on different platforms. While there are certain risks for ordinary players participating in Polymarket—after all, it may be considered gambling, and players may face legal risks ranging from serious gambling offenses to administrative penalties for participating in gambling—these risks are generally manageable. However, promoting Polymarket is a completely different matter. According to the "Opinions on Several Issues Concerning the Application of Law in Handling Online Gambling Crime Cases" issued by the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security on August 31, 2010, the following circumstances may constitute the crime of operating a casino: First, acting as an agent for a gambling website and accepting bets, thereby organizing gambling activities online. Second, although companies or individuals promoting Polymarket in China may not have personally established the Polymarket platform, they may still be considered accomplices in the crime of operating a casino if they meet the following conditions: "Providing services such as internet access, server hosting, network storage space, communication transmission channels, advertising, membership development, software development, and technical support to gambling websites, and receiving service fees exceeding 20,000 yuan." As can be seen, promoting Polymarket in mainland China carries far greater legal risks than simply participating in it. Therefore, Attorney Liu advises everyone not to promote or introduce others to Polymarket. III. In Conclusion While the author believes 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 numerous potential pitfalls associated with the Polymarket platform, such as gambling (or at least suspected gambling), virtual currency, and political sensitivities, the author does not recommend deep involvement, especially promoting Polymarket.