In recent years, the cryptocurrency known as Bitcoin has exponentially gained popularity and recognition worldwide. Not only has it disrupted the financial industry but it has also infiltrated a wide range of sectors, including sports betting. Indeed, Bitcoin sports betting has become a novel trend among gamblers for its perceived advantages such as anonymity, fast transactions, and low fees.
However, the legal landscape of Bitcoin sports betting especially in the United States is rather complex, primarily due to the controversial status of both online sports betting and the use of cryptocurrency.
The Murky Waters of Crypto and Online Sports Betting
In the U.S., the federal government generally regulates online sports betting, while individual state laws can complicate matters further. Historically, the Federal Wire Act of 1961, which prohibited interstate wagering on sports events, was a notable regulatory statute. It was, however, surpassed by the introduction of the Professional and Amateur Sports Protection Act (PASPA) in 1992, which established a federal ban on sports betting.
The game-changer, however, was the U.S. Supreme Court ruling in 2018 that struck down PASPA thereby opening up a pathway for individual states to legalize sports betting. To date, over twenty states have now legalized sport betting in one form or another, including prominent states like New Jersey, Nevada, and Pennsylvania. However, the issue of Bitcoin sports betting manages to add a whole new level of complexity to this landscape.
Bitcoin and U.S. Law: A Complicated Affair
Since Bitcoin bypasses typical financial institutions, it exists in a somewhat grey area from a legal standpoint. The United States government has so far hesitated from categorizing Bitcoin as a currency, due to its volatility. Instead, it is considered a tax-compliant asset, subject to capital gains tax.
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has issued some guidance regarding Bitcoin. In general, it considers the use of convertible virtual currencies, including Bitcoin, for either goods or services, as an acceptable practice.
However, the application of this position to Bitcoin sports betting is less clear. It would seem to suggest that where sports betting is legal and the operators are willing to accept Bitcoin as a form of payment, then it would be considered legitimate. Heads up, the rules can differ significantly from one state to another, hence, the need to consult with legal experts or do thorough research before engaging in Bitcoin sports betting.
Bitcoin Sports Betting Sites: An Emerging Market
Despite these legal ambiguities, several Bitcoin sports betting sites are emerging with increasing enthusiasm from consumers. In states where sports betting is legal, players use Bitcoin for placing their bets for its benefits. Some established sports betting sites have even begun to accept Bitcoin alongside traditional payment methods, reflecting the growing legitimacy of Bitcoin in the eyes of both consumers and regulators.
A Future of Uncertainty and Opportunity
Looking ahead, the landscape of Bitcoin sports betting in the United States stands at the intersection of ongoing legal debates concerning online sports betting and cryptocurrency regulation. The outcome of these debates will undoubtedly shape the future of Bitcoin sports betting in the U.S., and the wider implications for the sports betting industry and cryptocurrency markets are significant.
While little remains certain about the future of Bitcoin sports betting in the U.S., it is evident that crypto-sports betting is here to stay. Whether it can lead the charge towards a more substantial paradigm shift in the industry will ultimately depend on ongoing legal developments and the evolving landscapes of online sports betting and cryptocurrency.
Sources:
1. Legal Information Institute. “18 U.S. Code § 1084 – Transmission of wagering information.” https://www.law.cornell.edu/uscode/text/18/1084
2. Supreme Court of United States. “MURPHY, GOVERNOR OF NEW JERSEY, ET AL. v. NATIONAL COLLEGIATE ATHLETIC ASSN. ET AL.” https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf
3. U.S Department of Treasury. “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies.” https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf
5. ESPN. “United States of sports betting: An updated map of where every state stands.” https://cahnrs.wsu.edu/news-release/2022/01/17/u-s-should-prepare-for-the-collapse-or-shrinking-of-cryptocurrencies/.
6. Forbes. “IRS Clarifies Tax Treatment Of Cryptocurrency ‘Hard Forks’.” https://www.forbes.com/sites/robertwood/2020/03/07/irs-makes-cryptocurrency-a-new-priority/
7. ESPN. “The United States of sports betting: An updated map of where every state stands.” https://www.espn.com/chalk/story/_/id/19740480/the-united-states-sports-betting-where-all-50-states-stand-legalization
