Crypto Gambling

Unless you spent the last few years marooned in an abandoned island, you must have noticed how the online gambling industry has exploded. In fact, it’s one of the industries on the internet with the highest degree of expansion. And it’s happening everywhere, not just in the world’s traditional gambling hubs (Curacao, Monaco, Las Vegas, etc.).

This is happening over the internet, which is to say that it’s occurring in the whole globe at the same time, it’s becoming something of a headache for many of the world’s governments who know they have to do something about it but don’t have the first idea of where to start.

The problems have to do with legal voids regarding the lawfulness of online betting in different jurisdictions which sometimes are national, but sometimes are regulated by states within a country and not by the federal government.

Very few individual states in the US allow gambling activities (Delaware, Las Vegas, and New Jersey) which is slightly weird as the US is probably the world’s largest consumer of gambling products.

The recent months and years have seen some of the states adopting a more progressive position on the subject and legalizing online casinos and sports betting for residents. This is not an altruistic move.

Keep in mind the colossal tax revenue advantages that such a move gives each state. It’s to be expected that, sooner or later, every state in the union will legalize online gambling in some way.

Digital Assets and Online Gambling

If finding the correct way to deal with online gambling wasn’t tricky enough for the world’s governments, there’s a new ingredient that could potentially make things even more intricate.

Over the last decade, all kinds of new technologies have appeared in the world. Chief among them has been the advent of cryptocurrencies, courtesy of Satoshi Nakamoto, and since digital assets are meant to fulfill the same uses as physical money, betting is one of the things you should be able to do with them. The question then becomes: is funding a gambling account with a digital asset legal?

Let’s explore a little context. Cryptocurrencies are produced by a technology called “blockchain technology.” That’s what you find if you look under any digital asset’s hood.

In a very concise definition, a blockchain is a decentralized database (or ledger) distributed uniformly over a network of computers. This database keeps the record of the coin transactions in the system, and it can’t be revised or tampered with because every node in the network maintains a full copy.

The blockchain way of doing things makes a lot of people nervous. It bothers governments because there is no room in a blockchain for central authorities. Things just can’t be steered in a particular direction.

It also bothers traditional financial institutions such as banks, or credit card processors because cryptocurrencies do away with conventional banking services. Each country has to decide whether the use of altcoins is legal or not within its national territory, and the positions taken so far by many governments in the world go from the very friendly (Malta) to the openly hostile (China). Some countries are struggling to find a balance, but most of the nations of the world are still undecided (or indifferent) to the subject.

The online gaming industry is a microcosmos of the same phenomenon since it’s also trying to find a way to deal successfully with the very same issues regarding digital assets. It’s entirely possible (even probable) that conventional gaming sites will start accepting Bitcoin soon, and that it could become the casino cryptocurrency of choice.

That would make sense because it’s convenient for the gambling sites as the fees are low, transactions are fast, and anonymity is virtually guaranteed by the blockchain technology.

Legality in some key countries

While it’s impossible to anticipate the future, one thing we can do for sure is taking a moment to review the current positions on gambling and crypto by some of the most critical countries in the world.

The United Kingdom: gambling is an old and honored British tradition. The English invented insurance as bets, for instance, so betting is regulated but allowed. There is the UK Gambling Commission which supervises the industry.

First and foremost, if you want to operate an online gambling site in the UK, you need to have a proper license (issued by the UKCG). If you hold the license, you are free to accept digital assets as a means of funding betting accounts.

Australia and New Zealand: Not a single country, of course, but they share similar policies. In Australia, there is the Interactive Gambling Act of 2001 (IGA) which regulates all online gambling operations. Under that law, online sports and race books are legal but other than that, the law forbids to operate online casinos within the country.

Australian residents can, however, use offshore services if they so wish. Also, most Aussies can use digital assets when the local jurisdiction allows it, and not all local authorities are friendly in that regard.

The Northern Territory Racing Commission (NTRC) has banned all use of cryptocurrencies by its residents. In New Zealand, all residents are allowed to gamble offshore (as stated by the Gambling Act of 2003). But cryptocurrencies are not regulated (which seems to mean they’re legal just because they’re not explicitly banned), so the decision of using alternative coins rests with the offshore service providers mainly.

The United States of America: the legal status of gambling (online or offline) is very frustrating. The authority to legalize these kinds of activities doesn’t belong to the federal government, but it’s decided by each individual state, which complicates things very much. Most states sill hold an exceedingly conservative position on this issue.

Gambling is legal in three states only so talking about using digital assets for gaming is little more than merely academic as the notion can’t really be tested under the current conditions. In 2006 the Unlawful Internet Gambling Enforcement Act (UIGEA) made it clear that banking electronically is downright illegal.

This position is clearly anachronistic, and it doesn’t mention cryptocurrencies at all. How could it? This law was promulgated in 2006 and Bitcoin came online only three years later, so it wasn’t under the law’s scope at all.

So the legality of betting with digital coins is somewhat undefined. But the best bet would be to play it safe and assume that, since digital money is indeed a form of electronic banking, it’s not legal.

Canada: the Canadian laws are quite similar to those in Australia and New Zealand. No law is in place that forbids Canadian citizens or residents from using cryptocurrencies to fund offshore gambling accounts (offshore being the key word) as long as the appropriate jurisdiction considers it legal.

As you can see, there are all kinds of positions about cryptocurrencies and gambling from country to country. Let’s remember that governments have never been able to legislate ahead of technology.

It’s always been the other way around, and the cryptosphere is a relatively new development on the planet as it’s barely a decade old. Governments usually take longer times even to notice (let alone acknowledge or legislate) new technologies and their consequences.

The way things are right now, the responsibility is yours. You will need to find out all the legal information relevant to your country or state of residence, read it, understand it. If you choose an offshore gaming service (which would be the natural choice since most betting websites are headquartered in only a handful of countries), you’ll also need to understand the laws of the website’s country. And then you’ll be able to decide if using digital money to fund a gambling account is a legal activity for you.

Gambling online can be a lot of fun, and using cryptocurrencies for that makes it even more enjoyable and exciting. But it’s crucial to decide prudently, in a way that will keep you out of trouble.

Image courtesy of PixaBay.

Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.