Cryptocurrency is one of the most exciting developments to hit the gambling world since online gambling began in the mid-to-late 90s. Now, for the first time, players can choose to bet and cash out in cryptocurrencies like bitcoin, offering up a range of advantages over regular online and mobile gambling.
With crypto gambling, privacy meets greater transparency. Players no longer need to run gambling transactions through their bank account or credit card. Yet at the same time, casinos and bookmakers can no longer pull the wool, thanks to ‘provably fair’ gambling on the blockchain. And that’s before you consider the benefits of the appreciating value of cryptocurrency holdings.
But as with any innovation around gambling, regulation is never far behind. Cryptocurrency gambling, in particular, sits at the intersection between gambling laws and cryptocurrency laws – both of which are still very much in development and subject to change worldwide.
So how are governments and regulators approaching this issue, and are they striking the right balance between player protection and effective regulation of gambling operators?
It’s worth starting with the situation in Japan, often held up as one of the most proactive countries when it comes to crypto legislation. In recent weeks, Japan’s House of Representatives put through two separate bills which had the legal effect of clarifying cryptocurrency as a legitimate asset and method of payment. Yet when it comes to gambling, there’s still very much a grey area around the use of crypto.
While the government has accepted that cryptocurrency is probably here to stay, reflected in their recent legislation, the rules around gambling remain steadfast. This isn’t crypto-specific – Japan has tight controls on gambling in general, before cryptocurrency is involved. But adding crypto to the mix does little to loosen the grip of Japan’s regressive anti-gambling laws.
Intriguingly, Japan has recently given the nod to the development of physical casino resorts, which could pave the way for a more liberal approach to gambling regulation in future. But for the time being, at least the position in Japan is clear – crypto gambling is a no go.
While Japan has led the way in developing crypto regulation, the United States remains woefully behind. In fairness, the US hasn’t borne the brunt of a colossal hack in the same was as the Mt. Gox attack, which brought the Japanese exchange and global crypto industry to its knees in 2014. But for now, the US positions on both cryptocurrency and gambling remain wholly inadequate.
Because of anti-gambling laws in the US, and a lack of clarity around the status of cryptocurrency, many gamblers in the US simply find themselves blocked at an IP address level from accessing blockchain gambling.
This is a real shame, given that many US gamblers do still bet online – it’s just that they do so in the dark, missing out on the transparency, better odds and convenient of blockchain gambling.
The United Kingdom is one of only a few countries in the world to have actually tackled the issue of crypto gambling head-on. It joins the likes of Italy, The Netherlands, Greece, Poland and Belgium in establishing a legal framework for betting with crypto.
The UK is generally more liberal when it comes to online gambling (at least for the time being). The same can be said of attitudes towards crypto. Lawmakers in the UK have therefore chosen the pragmatic route, treating crypto gambling in the same way as any other form of online gambling for the purposes of gambling law.
In a nutshell, if you’re a gambling operator taking bets in bitcoin in the UK, you have to abide by the rules and laws governing all other gambling operators. This means you need a license from the UK Gambling Commission, and to meet the compliance standards required of any other operator.
While the regulation of cryptocurrency is a discussion in its own right, it seems clear that the most effective way to regulate crypto gambling is to treat cryptocurrency like any other currency.
In reality, blockchain gambling only increases the safeguards and protections for players, with results written to the blockchain making guaranteeing player fairness pretty much automatic.
While Japan and the US, in common with much of the rest of the world, are still wrapping their heads around what cryptocurrency is, the approach taken in the UK and elsewhere in Europe seems to be a sensible approach to this question.