Bitcoin Gambling Transaction Still Illegal
Bitcoin has led to some permeated the online gambling industry. Although there are many positive effects to introducing the cryptocurrency to the industry, one of the main ones is that the algorithms have proven to be fair and have reduced chances of rigging. However, even with the progress of bitcoin in the gaming industry, there are issues involved. The main blockades are that bitcoin gambling is either illegal or heavily regulated.
At this point, the bitcoin gambling industry is mainly outside of the United States, as it has yet to develop here. This could be due to many reasons, but one of the most prominent may be that traditional online gaming already faces an array of obstacles and has a complex history in the regulatory field. Federal legislation, known as the Unlawful Internet Gambling Enforcement Act (UIGEA) is a component of the SAFE Port Act. Under this piece of legislation, US banks cannot process online gambling transactions. Accordingly, US gambling companies perform their business and transactions offshore.
The Act has failed to deter all online gaming casinos. For example, in 2011, the United States indicted three of the largest online casinos and forced them to shut down, an event known as “Poker’s Black Friday.” The event led to something positive though for the sports betting field, which Is enactment of the Federal Wire Act. The Federal Wire Act provides that certain types of online gambling, such as lottery sales, online poker, and casino games, are considered to be legal.
Despite some headway, there is still many difficulties that prevent online gambling industries from thriving in the United States. Many online gaming platforms are concerned about being shut down and fined amid uncertainty of legislation changes. The current state of the industry is that 41 out of 50 states makes online gambling legal and websites in states that allow for online gambling are legal under federal laws as well as long as they comply with the Federal Wire Act, UIGEA, and any other federal laws concerning online gambling.
Although traditional online casinos have grown word wide, there may be more roadblocks for bitcoin casinos because bitcoin can be used for money laundering. According to the Center on Sanctions and Illicit Finance (CSIF), which conducted a study on bitcoin money laundering from 2013 to 2016, bitcoin casinos were responsible for 25.8% of all bitcoin-related money laundering operations.
Another significant obstacle for bitcoin casinos is that there is uncertainty concerning regulation in the United States. In December 2017, Congress passed legislation that covered topics such as cryptocurrency taxation. Government officials are also working to develop thorough enforcement of cryptocurrency taxation.
However, there is the concern that bitcoin transactions will be untraceable, which may lead to criminal activity – such as money laundering. Further, traditional lotteries and casinos may lobby against the adoption of bitcoin casinos because they could cut into traditional casinos’ profits. As a result, casino operators and regulators will need to generate legislation that is beneficial to all of the parties involved.
Today, only two casinos in the United States allow players to use BTC and only at the front desk or locations around the hotel. The cryptocurrency cannot be used for gambling purposes. This type of stance has caused bitcoin casino operations to take place offshore and one of the most prominent locations today is Malta. The Malta Gambling Authority legalized bitcoin casinos. Further, Curacao eGaming provides two bitcoin casinos, which are Bitstarz and Bitcasino.io.
Although the United States does not take a friendly stance toward bitcoin casinos, things may change over time and is dependent upon regulations, the public, and private entities.