Bitcoin and other cryptocurrencies have been widely used in the crypto gambling industry. Adding the market capacity of the top 22 cryptocurrencies used in online crypto casinos results in more than 150 million dollars.
Given the market cap, is crypto gambling legal? We answer that question in this article as we look at the usage and lawfulness of cryptocurrencies in casino games, and more specifically, the legality of bitcoin casino sites.
We are not lawyers. We do not know your situation. Always consult with a local lawyer in your jurisdiction for formal legal advice. This content must not be taken as professional legal advice. This article does not create an attorney-client relationship.
Can I Gamble With Bitcoins?
Is Bitcoin gambling legal in your jurisdiction? Various countries and their territories have their own regulations regarding the use of Bitcoin and other crypto coins in gambling sites, which we will discuss in detail.
Bitcoin Gambling in the United States
The use of Bitcoin throughout the US is legal and is considered as a currency by the IRS in terms of taxable transactions. When it comes to using Bitcoin for gambling games, there are no direct laws that make cryptocurrency-gambling illegal or are allowed.
As long as an individual is not using Bitcoin for any legal transactions, such as the case of a man arrested by ICE agents for laundering money, cryptocurrency is allowed in gambling sites that accept them. Only four states allow their residents to play on online gambling sites.
Delaware was the first state to allow online gambling in 2012 as long as residents play in approved online casinos. Following Delaware in legalizing online gambling, is Nevada which is home to the WSOP poker tournament. Allowing online gambling in Nevada is the result of overturning the Federal Wire Wager Act. New Jersey looked to tap into the gambling market by allowing online casinos in 2013. In Pennsylvania, the state office modified its gambling laws that allow regulated casino sites to operate within the state.
Bitcoin Casinos in the United Kingdom
Gambling with cryptocurrency is more flexible in the UK with the United Kingdom Gaming Commission (UKGC) acknowledging the digital currency. UK residents can use Bitcoin and other crypto coins in UKGC licensed gambling sites. Licensed online gambling sites are expected to comply with the organization's standards on anti-laundering practice, problem gambling awareness, and much more.
While cryptocurrency gambling sites are regulated, digital transactions are not. UKGC cautions any online gambling patrons when using digital currency. Officials are warning people of the risks involved in the currency such as transactions being permanent and irreversible. Other risks also include the incredible fluctuation of the cryptocurrency price since there is no central agency controlling it.
The UK government office has been working on regulating cryptocurrency since 2015. In 2020, the Financial Conduct Authority (FCA) released its Cryptoasset Consumer Research Note that can help the organization find the effect of cryptocurrency on UK consumers.
Bitcoin Gambling in the Rest of the World
In Malta, the use of cryptocurrencies in gambling sites is not as open as in the UK. The Malta Gaming Authority licensed casinos do not accommodate cryptocurrency deposits despite the popularity of Bitcoin. Officials within the MGA are working on allowing licensed casinos to accept crypto-assets through the Sandbox Framework Initiative.
Gibraltar takes an open stance on cryptocurrency in 1998 when the Gibraltar Gambling Commission (GGC) allows crypto gambling sites. Online Bitcoin gambling in the country is possible thanks to the Digital Ledger Technology (DLT) Regulatory Framework. Licensed casinos are still required to follow specific guidelines set by the organization such as providing accurate and factual information to customers.
Other countries accepting Bitcoin are increasing such as Hong Kong, which set its cryptocurrency regulation in 2020. Cryptocurrencies are complicated to regulate since some are classified as non-securities, allowing them to enter the gray area of the law. With the digital currency regulations, Hong Kong Securities and Futures Commission opens the door to the country's cryptocurrency gambling market.
Are Crypto Casinos Licensed and Regulated?
Rules for cryptocurrency gambling vary across different territories and the agencies that regulate every gambling site within their scope. Here is a quick summary of the rules of popular territories.
|United States||Online gambling with Bitcoins is available only in select states. Playing in offshore gaming sites is not allowed.|
|United Kingdom||Every UKGC licensed casino can transact with Bitcoins with the regulation office deeming the digital currency being equivalent to cash.|
|Malta||MGA prohibits its licensed casinos to accept cryptocurrency until the office found the means to regulate it.|
|Isle of Man||Isle of Man's Gambling Supervision Commission (GSC) allows its licensed online gambling operators to accept cryptocurrencies as Convertible Virtual Currencies (CVCs).|
|Sweden||Not only is Sweden allowing cryptocurrencies among its licensed casinos, the country even created its digital currency in the form of E-krona.|
Each regulation office makes sure its licensed casinos are following their respective rules when handling cryptocurrencies. One example is the Know Your Customer (KYC) policy that requires patrons to verify their identity when creating an account. KYC rules allow authorities to track suspicious transactions and prevent money laundering through cryptocurrencies. While every territory has control over the casino's operation and their way of advertising their business, no regulation office can control cryptocurrency transactions.
Bitcoin and most cryptocurrencies do not have a central office controlling all transactions. No player or office can reverse any payment if they happen to send their digital coins to the wrong address. Prices also fluctuate daily where a player might double their winnings in one day or lose half of it within a week.
Crypto Gambling Is Still The Wild West
Casino players should be wary of using Bitcoin since crypto-gambling regulations are still the wild west of online gambling. Fortunately, you can protect yourself by verifying the authenticity of an online casino and its license. Your funds are still secure if it is with a licensed operator, who can compensate you for funds lost due to an error on their side.
The regulations and the legality of gambling with cryptocurrencies come down to the operators and their business procedures, as well as the jurisdiction you are playing from. Remember that no office or authority can control the value or transaction of Bitcoin and other crypto coins (that's the whole point with cryptocurrencies, after all). Despite the risk, digital currency provides players within strict countries to play slots, poker, blackjack, table games, and other gambling attractions.
This article was published on January 22, 2021, and last updated on March 12, 2022.