Bitcoin and the online casinos that use Bitcoin are really disrupting the online gambling industry in a way that is tough to measure. Every gambling vertical is getting impacted whether it is online casinos, betting on sport, online poker and even bingo and lotteries. Bitcoin casinos are one of the fastest growing sections in online casinos and that isn’t always a good thing. Bitcoin is a payment facilitator where value is transferred without regard for jurisdictional laws. That isn’t to say that there aren’t regulated online gambling sites with gambling licenses that abide by the law but there are a lot of gaming sites that operate on basic licenses or no licenses at all and are targeting players in markets where they are either not allowed or don’t have the license required to do so.
The irony in all of this is the stricter a country is at blocking online gambling or at least enforcing heavy regulations, it seems to further drive more traffic to these black markets which are almost unregulated.
Let’s look at a few countries and markets to see what they are dealing with.
Bitcoin Gambling in the United Kingdom
Once upon a time, the United Kingdom was regarded as having the best regulation out of any jurisdiction and it was viewed as the model for other countries could copy to structure their own online gambling licensing body. What the UK did was setup their own body called the United Kingdom Gambling Commission (UKGC), setup fees to get a license, required companies pay taxes and more or less require that advertising in the UK targeting UK players only be done so with a gaming company that has a UKGC gambling license. The UK market itself is considered very valuable so companies had no problem with these rules and regulations. However, over time, the UK markets have started to change where more companies were getting fined for various offences including accepting bets from problem gamblers. What is currently being proposed is that credit cards be banned for a method of depositing along with setting max bet limits on slots to £2.
Due to these changes many companies have already voluntarily withdrawn from the UK markets and dropping their UKGC license whilst others have opted to operate without a license, breaking UK law but spending the money they save on taxes, fees and fines on offering bonuses that no licensed operator.
Bitcoin Gambling in the United States of America
In 2019, there have been more individual states setting up their own licensing body for regulation as federally, the US government hasn’t done anything to regulate and tax online gambling. Although some states like New Jersey have made a start with regulation, some of their rules for operating within the state have made it tough for affiliates to operate in forcing them to apply for a license. Even though New Jersey as a single state is getting close to $500M in online gambling revenue for 2019, they have enough restrictions in which operators and marketers can target their residents and this only keeps opening the door for black market operators to take more revenue out of the state not just from players but also in lack of taxes collected. Crytpo currencies facilitate unlicensed operators accessing these markets.
Bitcoin Gambling in Spain
Despite having their own online gambling licensing body setup called Dirección General de Ordenación del Juego, this hasn’t at all stopped Bitcoin casinos from operating in Spain. There are many brands operating with a Curacao gaming license or even ones with a “Costa Rica” license yet players are still finding their way in depositing with Bitcoin to Bitcoin casinos. This is all happening despite Spain closing in on 1 billion euros in revenue in 2019 according to an article by CalvinAyre.
Bitcoin Gambling in Australia
Australia has been against online gambling for a while but it was only recently that online casinos started to cease operating in this marketplace and this is including many Bitcoin casinos. You would think these Bitcoin casinos would have no regard for the laws here but there is a big difference when something is illegal and when it is illegal and the government is pursing companies and sending out large fines to stop the activity altogether. You can read more about Australia’s online gambling laws here. Despite this, it hasn’t stopped all operators from working in this lucrative market. While this is happening, affiliates are being left in the middle as they are companies and websites that have a harder time evading the law. This is causing operators to find more ways of getting access to these players without the need for affiliates which only means that the operators are using shadier tactics to acquire players like spamming them with databases and they set to gain more profits by not having to pay out generous affiliate commissions.
Lack of Player Protection
The irony about regulation is that it should help to protect players while also collecting taxes along the way. Unfortunately one situation that has been documented on more than one occasion involves Bitcoin casinos accepting deposits from players but rejecting cashouts because of a terms and conditions violation. That specific violation often happens to Americans so the situation is as follows: An American joins a Bitcoin casino, loses money consistently for the next 6 months but upon their first cashout, they are asked for KYC documents. KYC meaning Know Your Customer and this means address and identity verification. When the casino learns they are American, they point to their terms and conditions that they violated the t&cs and they reject the cashout but don’t refund all the deposits that happened previously. The same situation can arise when it comes to underage gambling. If someone under 18 or under the legal age of gambling in their jurisdiction decides to gambling for real money with Bitcoin, there are no checks in place for age or identity verification. Most casinos will take the money and ask questions later. Whenever a problem arises, the casino simply says sorry, t&cs violated so they won’t honour a cashout. So players are enticed by some of the very large Bitcoin casino bonuses that players can claim but some players are not away they might not be accepted for cashing out and you’d think this would be easy for a casino to know when they are accepting Bitcoin from a player that they don’t accept.
Why are Bitcoin Casinos Growing?
It is safe to say that Bitcoin casinos are past the fad stage and this won’t be going away anytime soon. Aside from the fact that Bitcoin facilitates payments regardless of jurisdictional law, the real kicker is the nature of the valuation of Bitcoin itself which is directly benefiting operators. That is Bitcoin as a specific cryptocurrency has a finite number of Bitcoins, essentially set at 21 million. This real number is most likely shrinking due to people losing access to their wallets. While any fiat currency experiences inflation, Bitcoin is having the opposite effect where it might be volatile as hell, but it is growing year after year. There are a lot of people around the world that think having your money in Bitcoin is safer than storing it in the bank.
What this means is that say if a Bitcoin casino pulled in $25 million in revenue in a single year, if Bitcoin keeps growing and assuming they don’t cashout all of their Bitcoin, this amount for them is only increasing in value making them wealthier.
Bitcoin Gambling and the Future
Bitcoin is a great way to facilitate a transfer of value without having large fees, having to wait long or having your transfer rejected for any reason including government interference whether warranted or not. Bitcoin is probably here to stay however when it comes to gaming companies, it is unknown if they’ll continue to be able to take players in the manner they currently do. We have seen in the past governments confiscating domains of gambling companies which severely disrupts an operation and if this happens too many times, it is unknown if an operator could survive. Unfortunately the more operators are shut down, the more they will try to find reliable ways to operate and everyone is playing a game of whack a mole where you think you’ve got rid of one but another one pops up.
Bitcoin is a great concept and many people around the world are fans of the cryptocurrency since governments can almost not be able to shut it down. For all the good that it creates, it creates just as much headache when it comes to enforcing gambling laws and licensing in any jurisdiction. It doesn’t seem like any government will be able to do as much about it other than go after any intermediaries which are affiliates and advertisers. Otherwise if a country establishes decent laws and regulations for online gambling then they won’t have to worry as much about the lost revenue to the black markets.
What does seem to be a reality is when any government makes gambling more restrictive, it starts to favour the black markets.
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