Is Bitcoin Gambling Legal?
When Bitcoin first made an appearance in 2009, most people knew very little – if anything – about this digital currency. More than a decade later, we still have many questions about legal issues surrounding Bitcoin, especially in the context of online gambling.
So, is Bitcoin gambling legal? The legislation in this area is still rudimentary, leaving a lot of space for speculation. Online casino operators planning to list Bitcoin among accepted deposit and withdrawal methods often face controversial and ambiguous regulations. Aiming to run their businesses legally, they try to find out not only if offering Bitcoin gambling services conforms to the laws of the country where their business is registered but also whether operating a casino that accepts Bitcoin requires any additional licenses.
How Do Crypto Payments Work?
Before we dive into the matter of Bitcoin gambling legality, let’s take a step back to review the unique aspects of this currency.
What makes Bitcoin and other digital currencies different from a traditional government-issued currency is the fact they can be sent from one user to another through a peer-to-peer network without the need of an intermediary such as a central bank.
Even though cryptocurrencies are decentralized, Bitcoin payments are still secure. All BTC transactions are verified by network nodes through cryptography – that’s why digital currencies are also referred to as cryptocurrencies. The information about transactions is irreversible and permanently recorded in the blockchain, a specific type of database that works as a publicly distributed ledger.
Where is Bitcoin Gambling Legal?
The popularity of crypto payments has increased dramatically over the last few years, making banks all around the world want to either control or eliminate Bitcoin. However, the closest thing these financial institutions can do is try and influence local laws and regulations regarding buying, holding, and making purchases with cryptocurrencies.
Governmental and financial authorities’ attitude to Bitcoin is undergoing rapid changes, with more and more jurisdictions adopting a more positive approach to cryptocurrencies and other blockchain-based services. However, many governments have yet to acknowledge Bitcoin as a real currency. If it’s not referred to as a “real” currency, the laws regulating traditional fiat-currency online casinos cannot be applied to Bitcoin gambling sites.
As of the moment of writing this article, buying Bitcoin, holding it, and using it for online purchases such as making deposits at crypto gambling websites is recognized as legal by many governments. However, some countries, such as Algeria, Morocco, Egypt, Ecuador, Bolivia, Nepal, and Pakistan, have imposed bans on holding and trading Bitcoin and other cryptocurrencies. If you are located in any of these countries, you’ll still be able to play casino games online and even create accounts at crypto gambling sites, as long these online casinos also accept deposits made in fiat currencies.
Additionally, countries such as Canada, China, Russia, Saudi Arabia, Columbia, Iran, Bangladesh, Taiwan, and Cambodia prohibit all banking transactions that involve Bitcoin or other cryptocurrencies. This means that residents of these countries cannot use their credit cards or bank accounts to purchase Bitcoin as banks are not allowed to facilitate transactions with cryptocurrencies.
Moreover, countries such as Indonesia and Vietnam let their residents buy and sell BTC or another cryptocurrency as an investment asset. However, these countries’ governments don’t let you make payments with cryptocurrencies, so you won’t be able to use them to make deposits at Bitcoin gambling destinations. Note that many online casinos let you exchange your fiat into crypto for withdrawal. While this may be a potential legal loophole for Indonesian and Vietnamese players, make sure to consult your attorney before proceeding with such transactions.
While many players overlook it, the money won from placing bets at online gambling destinations is not exempt from taxes, just like the money you can earn by playing at brick-and-mortar casinos. Additionally, using cryptocurrencies to make deposits may complicate taxation even more.
If you’ve been asking yourself “Is Bitcoin gambling legal in the US?” take a look at this example. In the United States, people who hold Bitcoin or any other cryptocurrency must pay capital gains tax on their digital asset. In other words, if you make a deposit worth $20 in Bitcoin on a gambling platform and withdraw $500 in winnings, you’ll need to pay capital gains tax on $480 if you end up selling that Bitcoin.
Given that each country has somewhat different rules regarding taxes in this context, getting in touch with a local tax accountant is the best way to learn more about this topic.
Key Facts on Cryptocurrency Gambling Legality
By now, you’ve probably realized there isn’t a single, clear-cut answer to the question of whether using BTC to gamble is legal globally. This is because different countries have different regulations, and some have yet to regulate this area. However, here we’ve summarized some useful key points that may help you resolve some of your quandaries:
- Whether Bitcoin gambling is legal boils down to whether you can access an online casino from your country. So, before you can answer the question “Is Bitcoin gambling legal in my country?” you’ll need to find out whether your government allows online gambling in the first place. If you can gamble online, chances are that you’ll be able to place bets in Bitcoin – as long as crypto transactions are not prohibited where you’re located.
- In general, specific laws regulating gambling with BTC are scarce. Gambling with cryptocurrencies is currently neither officially allowed nor prohibited in most countries.
- In countries that strictly prohibit online gambling, the authorities may take strong measures against not only Bitcoin betting sites, but also players who make wagers with Bitcoin.
- Much like a fiat-currency casino, a gambling site that offers gambling with digital currencies also requires a gambling license. For example, any such gambling business in the UK must hold a licence by the UK Gambling Commission. A few reputable gambling jurisdictions – such as the Curacao eGaming Authority – have already started issuing gambling licenses to casinos that accept deposits made in cryptocurrencies. What this means is that such licensing agencies have accepted the responsibility of controlling the operation of cryptocurrency websites. As long as a crypto casino follows the regulations imposed by the jurisdiction, it operates legally.
Benefits of BTC Gambling
Why does all of this matter, you may wonder. There’s a short answer to that question – cryptocurrencies have made online gambling more straightforward and accessible than even before.
While fiat-currency casinos may require you to register with your government-issued ID, make a deposit using your bank account, and make withdrawals in person, Bitcoin gives you a chance to bypass all of these inconveniences. If you have some crypto on hand, all you have to do is send it to the Bitcoin casino’s wallet, and depending on the site’s processing speed, your money could be credited to your account within minutes. Cashing out is equally simple – all you have to do to make a withdrawal is request a certain amount of money to be transferred back to your Bitcoin wallet.
Another significant benefit of using Bitcoin at online gambling sites is that it allows for complete anonymity. If maintaining your privacy while enjoying a game of blackjack is your main priority, gambling with BTC is the way to go. Most websites don’t require your name to sign up and let you either choose a username or assign you randomly generated credentials.
Frequently Asked Questions (FAQ)
Where is Bitcoin gambling legal?
While there are countries which prohibit not only gambling with BTC, but also buying and trading this and other cryptocurrencies, specific laws regulating this area are very rare. Since the regulation concerning the use of Bitcoin as a means of payment is still underdeveloped, making wagers using this cryptocurrency is currently neither officially allowed nor prohibited in most parts of the world. Note that, in the countries where it is explicitly legal, such as the US, any sum of money you win by gambling with BTC will be subject to taxation.
Is Bitcoin gambling legal in Australia?
According to a 2017 declaration made by Australia’s government, cryptocurrencies such as Bitcoin and others that share its characteristics are legal in the sense that they can be purchased, traded, and treated as property. As such, it is also subject to Capital Gains Tax. But the problem here is not with Bitcoin, but with online gambling in general: Internet gambling is illegal in Australia, which subsequently means you cannot gamble at any online casinos in this country.
Is gambling with a VPN illegal?
So, is Bitcoin gambling legal if you are using a VPN to access gambling websites? Once again, there isn’t a simple answer to this question. As long as your country’s laws allow the use of virtual private networks, you aren’t aren’t doing anything illegal gambling with one as you might just be looking for another layer of protection while placing bets online. However, keep in mind that governments with regulated gambling markets often block players outside of their borders.