How bitcoin created a new world of online gambling

Online casinos that offer the possibility of playing with cryptocurrencies are currently flourishing. It is often possible to start the game without providing personal data and sometimes an e-mail address is enough. In the United States, online casino gambling is illegal in all but six states and is controlled by strict rules that make it difficult for users to transfer money in and out of regulated internet casinos.

But those rules don’t hold so well when it comes to bitcoin. Bitcoin casinos that offer users the ability to gamble with cryptocurrencies are booming and skirting regulations while operating and promoting with impunity. Dozens of gambling sites now offer a quick way to start playing, most with little user background checks.

Do crypto-casinos remove player protection?

“The crypto-casino segment has exploded in a very short time. As a decentralized system, it’s even harder to figure out how to investigate know-your-customer breaches,” said Alex Costello, vice president of government relations at the American Gaming Association, a trade group that represents gaming. US casinos and sports betting affiliates. uses.

“We are a highly regulated industry for good reason. This notably includes anti-money laundering and responsible gambling regulations,” added Costello.

Anonymity as a disadvantage in gambling addiction

Gamblers at risk of gambling addiction find a lack of mechanisms in crypto-casinos to prevent themselves from gambling. An addict who spoke to NBC News but asked to remain anonymous said crypto casinos don’t offer the same addiction relief features as traditional gambling services, such as casinos. B. the possibility of being blocked.

“I had done everything I could on the spot to stop myself from doing it and suddenly there was this Hail Mary,” he said. “I was able to self-exclude 20 times and it wouldn’t make a difference as I could always come back to open another account.” If the self-ban only works through the name of the player and opening a new account without the same and just an email address can be opened without complications, the system surpasses itself.

Payments with fiat currencies do not work anonymously

Online gambling has grown exponentially in recent years, both in the United States and abroad. Twenty-two states and Washington, DC have legalized online sports betting. Online casinos that operate outside of the United States must register in each state in which they operate. They go to great lengths to verify the physical location of their customers. They accept deposits by credit card or wire transfer, in compliance with federal anti-money laundering regulations.

Cryptocurrencies are also in the midst of their own boom as companies scramble to sell bitcoin, ether, and a host of other digital assets. According to a recent NBC News poll, one in five Americans have invested, traded, or used a cryptocurrency.

Operators just need to be trustworthy to avoid being tracked

Crypto casinos are also booming. These websites, which promote all types of casino games, often use typical payment methods such as credit cards, which can be used for digital versions of slots and roulette, in addition Bitcoin and Ether. Not all crypto casinos surveyed by NBC News are based in the United States, making government oversight difficult.

“Online gambling that was not connected to a larger criminal network was considered a lower priority due to limited government resources,” said John Holden, an assistant professor at Oklahoma State University who studies the gambling regulations. In plain language, this means that crypto-casino operators need not fear investigations by US authorities if they do not sufficiently protect their customers.

Billions of sales without state authorization

This may change soon as the crypto casino market is growing rapidly. A survey by blockchain analytics firm Chainalysis found that around 70 crypto-enabled casinos are currently in operation and have an estimated revenue of $2.8 billion so far in Q1 2022. Last year, the industry made $10 billion in revenue, a 64% increase from 2020.

And yet, there is no state where crypto gambling is legal. “To date, no state has permitted direct gambling with cryptocurrencies,” Holden said. We can see the decentralization and anonymity of payments with cryptocurrencies as an advantage and a disadvantage. The nature of the blockchain allows for anonymous payments. In this way, players can easily evade the regulation of state surveillance authorities. In Germany, there is a maximum deposit of 1,000 euros per month at gambling sites. In crypto casinos, this regulation cannot be controlled since all payments are made anonymously.

Conclusion: Crypto-Casinos Make Regulating Online Gambling More Difficult

Anyone offering online gambling needs a license issued by the state regulatory body of the country in which the company is headquartered. Market leader Malta Gaming Authority has not yet authorized any casinos to accept crypto payments. However, the authority has been working on developing regulations for this type of casino since 2018. The second phase of testing is currently underway.

This is why most crypto casino operators currently operate with a license from the Curacao Gambling Authority. Due to the crypto boom, experts are already seeing a shift from Malta to Curacao. The Curacao license is relatively easy to obtain and also incurs much less cost per year. Player protection measures are not part of the requirements of this authority. Country regulators need to consider how to address this shortcoming. But as long as blockchain payments are anonymous, nameless, and without the involvement of banks, finding a solution in this regard will be difficult. The fact that this problem is still solved is demonstrated by the fact that China and the United States want to take more action on digital currencies in the future.