No matter if you are a crypto enthusiast and believe that it will revolutionize the world of finance or someone who thinks that it is total nonsense, we cannot deny the fact that cryptocurrencies already have a massive impact on many industries, including online casinos.
We’ve already seen casinos starting to accept cryptocurrencies in games as a form of gambling, and this has a much bigger impact than just another payment solution. First of all, cryptocurrencies unlock the global market and are perfect for navigating through the legal landscape of casinos. There are some people who use cryptocurrencies to bypass the process of geo-restrictions or payment gateway restrictions.
But are crypto casinos legal and are you safe engaging in such activities?
Let’s take a deep dive into the legal landscape of cryptocurrencies in online casinos and find out whether or not they are safe.
What Exactly Are Crypto Casinos?
Well, the name tells it all. A crypto casino is just like a regular online casino platform, but instead of traditional FIAT currency used in the process, people can wager using cryptocurrencies like Bitcoin, Ethereum, or other digital assets.
But what makes crypto casinos special? Is it just the different payment options?
As you probably already know, cryptocurrencies are built on top of a blockchain, therefore they come with more advantages such as anonymity, faster transactions, and in most cases lower fees (depending on the network).
The true difference between cryptocurrencies and traditional payments is the way transactions are processed. Unlike traditional online casinos where you have a middleman (the bank) processing transaction, cryptocurrencies are entirely independent and are sorted out on the blockchain removing the middleman. This often reduces processing times and lowers traditional bank fees.
Despite cryptocurrencies reaching billions of dollars in market cap, their legal framework governing the crypto industry varies across jurisdictions. In most cases, cryptocurrencies operate in the grey area and are not entirely regulated. This also includes online casinos that use cryptocurrencies.
The Current Regulatory Landscape
When it comes to crypto casinos, the legal aspect of operations depends on where you are in the world. Some countries like El Salvador have more favorable views over cryptocurrencies, and others try to block the process of legalizing cryptocurrencies.
Here are some of the regions and their views on crypto casinos:
United Kingdom
In the UK, we have the UK Gambling Commission (UKGC) that regulates online gambling, and to be honest, quite rigorously. This is not a bad thing. After all, their goal is to create a safe and fair environment where customers won’t be taken advantage of in any situation.
Even though we can spot that the UKGC is starting to acknowledge the use of digital currencies and their presence in online gambling, crypto casinos still remain in the gray area in terms of regulation.
Why? Well, their regulatory bodies have raised quite a few concerns, such as concerns over anonymity and potential money laundering. Therefore, if you want to open a crypto casino in the UK, Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations are essential in order to get a chance to obtain a license.
United States
In the U.S. things are quite complex. The government has quite negative views on cryptocurrencies in general, although they recently approved the creation of a Bitcoin ETF, which opens the legal gate of cryptocurrencies in the country.
However, online gambling in the U.S. is based on a state level. Some states in the U.S. are allowing online gambling and casinos, and some states strictly prohibit online gambling. States like Nevada have legalized online gambling completely, including crypto gambling but they have to adhere to specific licensing requirements.
Therefore, opening a crypto casino in the U.S. is quite difficult. The crypto industry isn’t quite regulated and businesses need to navigate both federal guidelines and varying state laws to ensure compliance.
Malta
Malta is often a country where most online casinos go for obtaining a gambling license just because of their easy licensing process. Here we have the Malta Gaming Authority (MGA), which was one of the first regulatory bodies that started offering crypto casino licenses.
However, just because most casinos obtain their license through the MGA, it doesn’t mean that they don’t have to meet strict regulatory requirements.
Malta always had a progressive approach towards online gambling, which is why they were the first ones to integrate cryptocurrencies into their legal framework, just so the players could feel safe and protected.
Key Legal Considerations for Crypto Casinos
Licensing and Compliance
Although crypto casinos still operate in the grey area, obtaining a gambling license is very important not just for the business, but for the entire industry. People would feel safer, there would be fewer scams and frauds, and online casinos that use crypto open the future of the entire industry.
What’s the Deal With AML and KYC Regulations?
Furthermore, we have AML and KYC regulations, which are crucial for illicit activities such as money laundering. This is the main concern in terms of online casinos that operate with cryptocurrencies, and coming up with a legal solution or a framework can help the industry advance quickly.
Taxation and Reporting
Another important thing in the world of online casinos is taxes on the wins. In the United States, gambling winnings must be reported on specific forms in tax returns.
Now, the strange thing is that cryptocurrencies are still in the grey area, but they still want to tax your crypto winnings. So, all crypto transactions should be reported in order to avoid any legal problems in the future.