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Cryptocurrencies have become a key part of the digital economy. Of course, the bitcoin rate isn’t monitored like the US dollar or other fiat currencies, but the volatility of these digital assets frequently hits the headlines. Some countries even recognize crypto assets as legal tender and can be used across various industries, including sports betting and casino gaming.
Since 2012, cryptocurrencies have become a popular payment method in the gambling market, stirring the minds of bettors worldwide. Market experts predict the crypto gambling market will be worth over 90 billion dollars by the end of 2024 and feature over 300 legal gambling platforms registered. That raises the question of how the crypto betting market is regulated and which jurisdictions have made it legal.
But first, what is crypto betting?
Crypto betting is a form of gambling that allows players to deposit their bankroll or withdraw winnings using crypto assets. This form of digital betting replaces traditional fiat currencies like the US dollar with cryptocurrencies like Ethereum, Dogecoin, and Bitcoin. However, crypto betting and exist on-chain or off-chain.
Off-chain crypto betting
Off-chain crypto betting allows players to use cryptocurrencies to make deposits into their gambling accounts. The betting operators use third-party services like BitPay to convert digital assets to fiat currency or convert traditional currency to crypto. Such casinos often have alternative options for deposits/withdrawals, and users need to register a betting account to place bets.
On-chain crypto betting
On-chain crypto gambling platforms operate through decentralized applications of smart contracts on the blockchain. Everything functions through the blockchain network instead of centralized servers that run traditional online casinos.
When a player places a bet, it gets recorded on the blockchain, and smart contracts are used to pay successful wagers directly. That enhances the transparency and security of these betting platforms, but players don’t need to register an account to start betting.
Where is crypto betting legal?
Crypto betting is generally legal in most jurisdictions where these two conditions are met:
– The jurisdiction has legalized online gambling.
– The jurisdiction recognized cryptocurrency as a legal tender or supports its use as a payment method e.g. Canada and Germany.
Currently, not many jurisdictions have legal crypto betting since many states haven’t legalized online gambling. Others, like the United States, don’t recognize cryptocurrencies as a unit of account or legal tender.
The most popular jurisdictions that have legalized crypto gambling and offer operators licenses include:
– Malta
– Curacao
– Kahnawake
– Gibraltar
– Isle of Man
These jurisdictions are popular for having favorable tax regimes and easy procedures for getting a license. However, jurisdictions like the United States don’t have specific regulations at the federal level allowing cryptocurrency gambling at the national level.
In the UK, the Gambling Act doesn’t provide any provisions for the use of cryptocurrencies. However, the UKGC published a paper addressing the use of cryptocurrencies in the gambling industry in 2017 requiring operators to obtain authorization to use virtual assets.
On the other hand, Canada doesn’t allow any form of gambling at a national level, although Ontario has legalized online betting. As such, crypto gambling in Canada is only legal in Ontario, although some Canadians use offshore sites.
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