The legislation in the area of Bitcoin gambling is very immature and leaves a lot of space for speculation. Operators starting their online casinos that will accept Bitcoin are often confused by controversial facts and ambiguous decisions of authorities in regards to the cryptocurrency. Desiring to operate their business in a legal way, they try to find out if offering gambling services for Bitcoin is legal, whether a Bitcoin casino needs to be licensed, and players from what countries can be accepted.
Key facts on Bitcoin gambling legality
As of today there are no single, clear-cut answers to the questions above. However, here are some useful key points that need to be understood:
1) In general there are no specific laws regulating Bitcoin gambling. It is neither officially allowed nor prohibited.
2) Attitude of different authorities to Bitcoin is changing quite rapidly, with more and more countries looking at Bitcoin positively and discussing regulation of cryptocurrencies and blockchain-based services. However, most governments today are still not referring to Bitcoin as to real currency. If it’s not a “real” currency, any regulations around traditional (fiat currency) online casinos should not be applied to Bitcoin gambling websites.
3) Despite the above, in countries where gambling is strictly prohibited, like the United States, the authorities may still take strong measures against Bitcoin gambling websites and/or gamblers who make wagers with Bitcoin.
4) Bitcoin gaming websites offer the benefit of increased anonymity to players. Bitcoin payments combined with anonymizing techniques like Tor make it extremely hard for the authorities to trace gamblers.
5) A few reputable gambling jurisdictions already issue licenses to casinos accepting Bitcoin (notably, Curacao and the United Kingdom), which means they accept the responsibility of controlling operation of cryptocurrency websites. As long as the online casino is following the rules and regulations of the chosen jurisdiction, it operates legally.
Should a Bitcoin casino have a gambling license?
It is important to understand that a gambling license is absolutely necessary for an iGaming business to pass the application for a merchant bank account and to officially work with electronic payment systems. When the casino website is working with Bitcoin, all of payment processing can be performed internally with no third party services involved that can control the crypto payment infrastructure. Deposits and withdrawals are transferred almost instantly and Bitcoins move directly between the player’s and the casino’s Bitcoin wallets. Thus, the necessity to present a gaming license to any financial institutions is eliminated. Therefore one could argue that when it comes to working with Bitcoin, a gambling license is optional or at least not a prerequisite to accepting payments.
On the other hand, a lot of players perceive a Bitcoin casino in the same way as any traditional online casino. They want to be sure that they bring their spare funds to a reputable and secure online environment and that their rights are protected by an independent authority. In this case, a valid gambling license from one of the gaming licensing jurisdictions becomes an important marketing tool that contributes to player loyalty and considerably increases the casino’s reputation.
Legislation around Bitcoin is sure to evolve at a fast pace worldwide in the next several years. Nowadays, to be on the safe side and rule out any potential risks connected to illegal business operation, it is advisable for casino operators to follow gambling laws applied to fiat money casinos in their targeted jurisdictions. Being at the forefront of the Bitcoin gaming business segment, we at SoftSwiss are always ready to provide professional consulting and support in the area of Bitcoin casino operation.