Bitcoin is increasingly getting more popular in the online gambling industry and online casinos are no exception. Bitcoin, which is a type of cryptocurrency, is used to make anonymous transactions. This currency is decentralized, quick, and has no third-party control, which makes it a subject of interest to casino players.
However, the use of this cryptocurrency is not widely accepted and its legality varies from one country and state to another. This has made it difficult for casino providers to allow the use of Bitcoin as a deposit method. Here is a guide about Bitcoin gambling in online casinos and its regulation.
Importance of Bitcoin Gambling Regulation
There are several reasons why Bitcoin regulation in online casinos is vital. Unlike the traditional payment methods where a third party is involved, Bitcoin is decentralized, meaning that there is no third-party control.
If you win, your funds are directly transferred into your electronic wallet. It is easy to convert into cash or make other cryptocurrency transactions without being blocked as is the case with banks or other financial institutions.
Cryptocurrency casinos allow their users to gamble anonymously and other players cannot see your progress. Also, the transaction fees are low and security is guaranteed thanks to blockchain technology.
However, most sites are not transparent and lack clear terms and conditions. Some do not operate ethically and online gamblers may not have a fair chance of winning. That is why regulation is important to ensure that online casinos engage in ethical practices and create a safe and fair environment for gamblers.
The Legality of Bitcoin in Various Countries
Bitcoin is completely legal in most countries and users can buy and use it for online purchases. However, some countries have completely banned cryptocurrencies like bitcoin. In these countries, it is illegal to not only trade but also hold Bitcoin. Countries, where bitcoin use and bitcoin gambling is completely prohibited, include:
Most countries have put in place regulations concerning online gambling. However, only a few countries like Belgium, Greece, Poland, and the Netherlands have regulations regarding crypto gambling in place.
In the UK, there are gambling laws set in place, and service providers that offer crypto gambling are required to abide by them. The Gambling Commission in the UK permits Bitcoin gambling but with a stern warning to the providers against being untrustworthy.
To regulate Bitcoin gambling in online casinos and reduce the risks associated with it, there are countries that have adopted anti-money laundering (AML) and know your customer (KYC) procedures.
Is Bitcoin Gambling Legal or Illegal in the US?
The legality of Bitcoin gambling in the USA is still a topic for discussion. When the Unlawful Internet Gaming Enforcement Act (UIGEA) was passed in 2006 by Congress, banks were prohibited from making deposits, withdrawals, or processing payments from online gaming. Following this move, most online casinos stopped accepting players from the USA.
While Bitcoin and other cryptocurrencies are not considered legal tender in the US, there are several states that allow transactions with it while others do not. Also, it is difficult to determine the legality of bitcoin gambling in the USA because some facets of the federal legislation are left open to interpretation.
Some of the states that allow their residents to transact using Bitcoin include:
On the other hand, these are the states that have banned selling, storing, or transacting this cryptocurrency:
- New Hampshire
- North Carolina
Is It Okay for Online Casinos to Allow Bitcoin Gambling?
There is no specific law that addresses the illegality of online casinos accepting Bitcoin gambling. However, it would be illegal for online casinos to accept Bitcoin gambling in countries where cryptocurrencies are prohibited. This includes countries like Russia, China, and North Korea.
As for the USA, things may be a bit different owing that the Unlawful Internet Gambling Enforcement Act (UIGEA) bans online casinos from accepting payments where it is illegal to do so. This means that online casinos in states that don’t prohibit online gaming have an easy time implementing online gambling than those in states that have banned online gaming.
How are the Rules Enforced?
It is the government’s role to try to regulate any payment methods that they consider illegal. Oftentimes, players of casino sites in areas where it is prohibited are not prosecuted when they make deposits using Bitcoin.
Instead, authorities usually conduct a crackdown on the operators to discourage Bitcoin gambling. It is easier for the government to track off-chain casinos that usually utilize a third-party custodian, than on-chain gambling that takes on the blockchain.
Besides, there are online casinos that do not accept visitors from countries where Bitcoin gambling is prohibited. In this case, the site blocks the user’s IP address and sends them a popup message letting them know that their deposits have been disabled.
Founder Dinis Guarda
IntelligentHQ Your New Business Network.
IntelligentHQ is a Business network and an expert source for finance, capital markets and intelligence for thousands of global business professionals, startups, and companies.
We exist at the point of intersection between technology, social media, finance and innovation.
IntelligentHQ leverages innovation and scale of social digital technology, analytics, news and distribution to create an unparalleled, full digital medium and social business network spectrum.
IntelligentHQ is working hard, to become a trusted, and indispensable source of business news and analytics, within financial services and its associated supply chains and ecosystems.