Abstract:
Are you or your friends developing trading tools, data analytics websites, or news aggregators for Polymarket? Although this platform holds overseas licenses, your tools do not handle user funds, and its users are located abroad, be cautious: under Chinese law, this may be deemed as providing technical support to gambling websites. This article clarifies the three most common pitfalls: assuming that if the platform is legal, your activities are also legal; assuming that not handling funds means there is no risk; and assuming that having users abroad ensures safety. You will see that such conduct may involve the crime of operating a casino and the crime of aiding information network criminal activities, as well as what steps to take now.
Keywords:
Accomplice to the crime of operating a casino, compliance of third-party tools, prediction market platforms, crime of aiding information network criminal activities, risks of Web3 entrepreneurship targeting overseas markets
Main Text:
Polymarket is currently the world’s largest prediction market platform. According to publicly available data, its global user base has exceeded 30 million, and as of early 2026, its monthly trading volume remained at approximately USD 1 billion. The scope of predictions on the platform is extensive, covering politics, sports, macroeconomics, finance, cryptocurrency prices, and many other fields.
As the Polymarket ecosystem continues to expand, a number of third-party tools have emerged. Developed by entrepreneurs, these tools aim to help platform users participate more efficiently in prediction market trading, compensating for deficiencies in functionality and user experience in the native interface.
However, from the perspective of Chinese law, the situation requires careful scrutiny. As Attorney Shao pointed out in his previous article, “What Regulatory Issues Do Crypto Prediction Market Platforms, Retweeted by Vitalik Buterin and Donald Trump, Face?？,” crypto prediction market platforms essentially provide binary option-like products.
Therefore, if Chinese entrepreneurs develop related tools within the Polymarket ecosystem, might they face domestic legal risks?
I. Author of this Article: Attorney Shao Shiwei
1
What Are the Three Types of Third-Party Tools in the Polymarket Ecosystem?
According to information compiled by the Changan I Biteye content team, third-party tools emerging in the Polymarket ecosystem can be broadly categorized into three types: trading terminal tools, data analytics tools, and news-trading tools. Tools developed by entrepreneurs mainly revolve around these three directions. To facilitate subsequent analysis of the legal risks associated with these tools, a brief introduction to each type is provided here.
1. Trading Terminal Tools
These tools primarily address the inconveniences and limited functionality of the Polymarket native interface. They provide interfaces similar to professional cryptocurrency exchanges, with core functions including market overview, batch order placement, take-profit and stop-loss settings, one-click copy trading, AI-assisted analysis, and cross-platform arbitrage.
For users, the benefits include faster operations, stronger execution, and lower barriers to entry—users can perform batch operations, set take-profit and stop-loss orders to control risks, and novices can replicate the strategies of experts through copy-trading functions.
2. Data Analytics Tools
These tools are dedicated to addressing the lack of transparency in market information. By analyzing public on-chain data from Polymarket, they create detailed profiles for each trading address. Core functions include trader leaderboards, in-depth wallet analysis (profit/loss, preferences), and identification of insider signals (such as flagging newly created wallets with heavy positions).
With these tools, users can track the movements of large capital and consistently profitable “smart money,” identify addresses that may possess insider information, and thus avoid blind following.
3. News-Trading Tools
These tools are fast news aggregators customized for Polymarket, addressing the problems of lagging news acquisition and disconnection from the market. They scan thousands of sources, including X (formerly Twitter), news websites, and official press releases, 24/7, and use AI for filtering and scoring.
For users, the advantages of these tools lie in greater speed—major news can be pushed within seconds of breaking; more efficient decision-making—news and market data are displayed on the same screen; and higher accuracy—AI automatically filters noise and labels importance scores, allowing users to focus only on the most valuable signals.
2
Three Common ComplianceConfusions Among
Entrepreneurs
From the entrepreneurs’ perspective, such third-party tools have their significance and value. In their view, the core objective is to help users track “smart money” and discover insider signals, thereby enabling faster and better decision-making.
Therefore, such products possess significant market potential and are more likely to achieve higher valuations and investment during fundraising.
However, as Chinese entrepreneurs, while optimistic about the development potential of such businesses, they may also harbor a subtle unease—will engaging in such business expose them to domestic legal risks? Their confusions mainly focus on the following aspects:First
, Polymarket has currently obtained a “Designated Contract Market” (DCM) license granted by the U.S. Commodity Futures Trading Commission (CFTC), transforming from a platform in a legal gray area into a federally regulated compliant exchange. Therefore, developing third-party tools for such a legally licensed platform should be legal, correct?Second
, the functions of the aforementioned three types of tools are respectively providing trading terminals, aggregating precise news information, and conducting pure data analysis. None of them handle funds, nor do they have functions for user betting or platform commission extraction. Therefore, should they merely be considered neutral software tools?Third
3
, the users of such products are predominantly overseas users, making it essentially a product oriented toward overseas markets. Does this mean it does not involve violations of Chinese law?
Analysis by Attorney Shao
Especially for entrepreneurs who have lived overseas for years and are unfamiliar with Chinese law, holding the above misunderstandings is understandable, but such misunderstandings are precisely the most dangerous.
The following will address two core questions:
First, does overseas compliance mean that it is legal for Chinese entrepreneurs to develop such third-party tools?
Although Polymarket has obtained compliance licenses overseas, from the perspective of Chinese law, such prediction market platforms exhibit obvious characteristics related to gambling, a point that is undisputed. According to the “Opinions on Several Issues Concerning the Handling of Cross-Border Gambling Crime Cases” issued in 2020 by the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security, providing services such as software development, technical support, and member recruitment for gambling websites constitutes being an accomplice to the crime of operating a casino.Therefore,it is not only behaviors involving user funds or assisting the platform in fund payment and settlement that carry legal risks. Although the aforementioned three types of tools have different functions, their purpose is to enable users to use Polymarket platform functions more smoothly, compensating for the deficiencies of its native interface. Objectively, these tools provide Polymarket with technical support, traffic diversion, member recruitment, and gambler solicitation services. Therefore, developing derivative third-party tools for such platforms carries legal risks related to gambling.
Second, if the tools and products are oriented toward overseas users, does this mean they do not involve Chinese legal risks?
If such products can be accessed within China via VPN, or even if no measures are taken to block domestic users, then according to the principles of personal jurisdiction and territorial jurisdiction, regardless of whether the entrepreneurs are located domestically or abroad, they may face Chinese criminal legal risks. Depending on the job content and behavioral patterns of the individuals involved, the charges may vary. In severe cases, this may constitute being an accomplice to the crime of operating a casino or the crime of illegal business operations; in less severe cases, it may involve the crime of illegally using information networks or the crime of aiding information network criminal activities.
4
Risk Warnings for Entrepreneurs
It is often most regrettable when such entrepreneurs cross legal red lines. Many of them have excellent resumes and overseas educational backgrounds, and are Chinese developers who have resided and lived overseas for years.
In their cognition and the environment they inhabit, Polymarket itself has obtained compliance licenses and is considered a legally operating platform; furthermore, there are numerous similar third-party tools in the market. Under these circumstances, it is difficult for them to recognize the risks associated with their own conduct.
Therefore, for entrepreneurs aspiring to deepen their involvement in the Web3 field, it is recommended to rationally assess the potential risks of entrepreneurial projects and make decisions prudently, based on a full understanding of domestic laws and market policies.
Recommended Reading
Arrested for Virtual Currency Pyramid Schemes: The Four Common Types of Involved Projects
Will Crypto KOLs Violate the Law by Running Paid Communities and Selling Courses?
