Legal Issues Behind Bitcoin Casinos
As the Bitcoin casino industry continues to grow fast, there is an increase in temptation among gamblers to shift to digital currency. Blockchain offers a safe and completely fair aspect of the online gamblers. Therefore, it is not a surprise that there is a fast embracement of the cryptocurrencies.
Casino players have concerns about whether Bitcoin casinos are legal. That is going with the poor reputation that cryptocurrencies have. Bitcoin functions completely with digital technology. It involves a system with a free flow of information. On the other hand, there are many popular BTC Casinos including Playamo, Oshi.io and Zet Casino.
However, some countries have come up with regulations. That is both for the usage of Bitcoins and casino operations. Therefore, some jurisdictions allow gambling, while others do not. Although legal actions or arrests are unheard of among gamblers, they must be up to date with their regions’ current regulations.
The legal status of Bitcoin
Although it is an electronic currency, it is unclear whether it meets the standards for an e-currency as per the EU Directive 2009/110. There are three unique elements of this digital currency.
- There is no involvement of a public authority in monitoring the digital currency.
- Due to the absence of any connection with conventional currency, issues may arise during conversion to real currency.
- It relies on a particular exchange rate that has no relation to the conventional currency. It purely depends on the conditions of the market.
Bitcoin in the gaming industry
There has been a lot of controversy surrounding the legality and feasibility of Bitcoin. Gambling operators and regulators in different countries have been employing different tactics in regulating the use of this digital currency.
Bitcoin uses cryptography to regulate its formation and transmission. It is an invention of Satoshi Nakamoto. The distinctive aspect of this digital currency is that there is no public entity that controls it.
Legal risks
Those who oppose the use of Bitcoin cite the likelihood of a violation of anti-money laundering rules. Most countries in Europe, such as Italy, have stipulated rules that apply to its casinos. Payments which can either be pay-ins or payouts can be an indicator of a suspicious transaction. That is if the mean of payment shows a different name from that of a gaming account holder. Some analysts argue that it is easier to trace Bitcoin transfers than the regular currency.
But it is not clear whether it can be the case if public authorities were to carry out an investigation. Besides, other questions arise too. Can a gaming operator restrict all payments that do not bear the name of the account holder?
Additionally, is the operator okay with being under the strict scrutiny of public authorities after transactions involving Bitcoin? Bitcoin transactions are difficult to monitor since there are no public entities involved in the processes. This digital currency is more of a commodity than a currency.
Another issue that has an impact on both Bitcoin and gambling related issues is taxation. Calculation of applicable taxation in transactions involving this digital currency is a real challenge. In Italy, gambling duties are payable at the end of every month. But the value of Bitcoins is subject to fluctuations. If wins’ taxation does not happen at the source, there may be an additional gamble for the casino operators and players.
This digital currency also faces the threat of cyber-attack. Besides, the mishandling of Bitcoins may cause substantial variations in its value. Such was the case in 2011 when the value went down $ to $ 0.01 from 17.50.
Legality issues by country
Below is a legal overview of major countries on matters of legal casinos.
1. USA
The United States has seen a major turnaround on matters of gambling. Sometimes back, casino gambling was illicit in other states except for Louisiana and Nevada. However, a total of eight states at the time of this writing allow any gambling activity thanks to recent rulings by the Supreme Court.
The authorities consider cryptos as decentralized computer-generated currencies. All earnings on digital currencies are subject to taxes. Besides, regulations on anti-money laundering are applicable.
2. Russia
Gambling activities are legal in this country. Some state-operated lotteries and sportsbooks legally offer services in Russia. However, there has been a prohibition on online gambling since 2017. Poker faces controversy as the authorities take it as a skilled game and thus legal to play.
The government of Russia came up with provisional federal rules in 2018. According to the minister of finance, the federal regulation seeks to control the formation, giving, storing, and transmission of digital assets, including Bitcoin. The regulations await gazettement as per the time of this writing, and thus there are no set out implications on taxes.
3. Canada
Gambling, to some extent, is legal in all administrative regions in Canada. However, there has been controversy about online gambling. Betting sites that have approval from the authorities allow people to stake. Some of the provinces legally run online casinos. Besides, there is no prohibition on the online purchase of lottery tickets.
According to the law, offering online gambling to citizens is illegal in Canada. Besides, online casinos that accept Canadian players and have locations outside the country could be considered illicit.
Possessing and transacting cryptos is fully legal in this country. But you must claim all profits from the digital currency as Capital Gains. Therefore, they have to undergo taxation.
4. United Kingdom
Gambling activities are fully legal in the United Kingdom. The only limitation to bet online is that you must be above the legal age. Both operators are based in the country, and those from other countries can offer their services to UK citizens. But it is through the regulation of the Country’s Gambling Commission.
The government considers cryptos as unregulated. But there has been no other strong opinion from the authorities regarding the digital currencies. Revenue and Customs classify Bitcoin as a one-purpose voucher. Their sales are subject to a 10-20% VAT. Additionally, the profits are liable to a Capital Gains Taxation.
Conclusion
Casino players must always be conversant with the rules of the country in which they participate in gambling. Players are responsible for their safety. One way to ensure safety is to use a Virtual Proxy Network when playing online. It hides the location, and thus a gambler can anonymously play at casinos in the world.