The much-debated phenomenon of cryptocurrency gambling has seen exponential growth in recent times, taking the casino world by storm. As the grey areas of this landscape continue to perplex players, operators, and governing bodies alike, we delve into the intricate world of cryptocurrency gambling and seek expert visions on how to tread these uncertain pathways.
As David J. Naiman, a California-based lawyer specializing in bitcoin and start-ups, defines it, “Cryptocurrency gambling occurs when an individual gambles with cryptocurrencies – digital or virtual currencies like Bitcoin, Ethereum, or Ripple instead of traditional fiat currencies.”
The Arrival of Cryptocurrency and Its Impact on Gambling
From Bitcoin’s introduction by the enigmatic Satoshi Nakamoto in 2009, the journey of cryptocurrencies has seen highs and lows. Over a decade later, cryptocurrencies have spawned a trend in the gambling industry.
The popularity of cryptocurrency gambling comes from the benefits it offers over traditional forms of gambling. Anonymity, low to zero transaction fees, instant processing of deposits and withdrawals, and provable fairness are few of the attractive aspects that make cryptocurrency gambling appealing.
However, the ‘Wild West’ nature of the digital currency ecosystem and the lack of global legal clarity concerning cryptocurrencies combined with gambling’s contentious legal status makes cryptocurrency gambling a murky subject.
Navigating the Grey Zones
The subject of legality differs from jurisdiction to jurisdiction. Individual states in the U.S., for example, have varied practices and laws with regards to online gambling, making it more complicated when cryptocurrencies join the scene.
According to Naiman, “The federal government rarely prosecutes onlinegambling, as it tends to defer to the states to determine what forms of gambling are sanctioned. However, under the Unlawful Internet Gambling Enforcement Act (UIGEA), it’s illegal for banks and credit card companies to process gambling transactions.”
So, where do cryptocurrencies fit into this? The SEC, IRS, and federal courts recognize digital currencies such as Bitcoin as property, not currency. This distinction has significant implications for the legality and regulation of cryptocurrency gambling.
“The situation remains ambiguous as UIGEA doesn’t specifically refer to cryptocurrencies, stated Naiman, gabbling with a bit of legal loophole here. Operators use cryptocurrencies as a loophole to facilitate gambling between U.S. citizens and offshore gambling websites.
Dr. Joseph F Borg, Senior Advisor at WH Partners and Vice-President at Bitmalta, highlights another aspect of gambling legality – the issue of jurisdiction. He postulates that an online casino operating from a territory where online gambling is legal and servicing a country where it isn’t, forms a blurred line.
Deciphering the Crypto Gambling Legal Landscape: Current Regulations
Admittedly, the global regulatory landscape is fragmented when it comes to cryptocurrency gambling.
In the United Kingdom, the Gambling Commission recognises the use of digital currencies as a cash equivalent and allows related transactions assuming that operators have the necessary operational standards and safeguards in place. Similarly, Malta issued the Innovative Technological Arrangement and Services Act, which provides a specific legal framework for blockchain and cryptocurrency businesses.
Other countries like the U.S., as mentioned earlier, have a considerably more complex approach towards cryptocurrencies, with different federal regulatory bodies treating them as property, commodities, or securities, thus affecting the legal landscape directly.
The Future Holds
While cryptocurrencies appear to provide the perfect hideaway for entities operating in grey areas, governance and legal maturation could turn the tides. Governments worldwide are becoming increasingly aware of cryptocurrencies and their ever-growing use in different markets, such as gambling.
As legal experts and industry stalwarts pronounce, the future of cryptocurrency gambling lies in regulation. Not only would it protect the players and operators, but it would also yield significant fiscal benefits through taxation.
The promising world of cryptocurrency gambling, despite its various shades of grey, is a sector to watch out for. The journey towards clarity, however, is fraught with multiple converging variables and interests. It ultimately relies on coherence between various stakeholders, including regulators, industry advocates and legal experts, for the jurisprudence of cryptocurrency in gambling to resolve from grey to black-and-white.
References:
1. Naiman, D.J. “Cryptocurrency Gambling and the Related Legal Issues and Regulations.” Cryptocurrency Gambling Legal Expertise On Navigating The Grey Areas, 2021.
2. Borg, J.F. “Online Gambling and Bitcoin: How to Protect Your Digital Currency.” Online Casino Report, 2020.
3. Legislation.gov.uk. “Gambling Act 2005.” 2005.
4. Malta Gaming Authority. “The Innovative Technological Arrangement and Services Act.” 2018.
5. US Department of Justice. The Unlawful Internet Gambling Enforcement Act (UIGEA), 2006.
6. DocuSign. CFTC vs. SEC: Who’s in charge of crypto?, 2020.
7. The Block. Cryptocurrency Regulation in the US: A Comprehensive Guide, 2021.
