One of the biggest drivers of crypto adoption around the world is the creation of laws to accommodate the various uses of digital assets. We’ve seen these with updated tax codes, legal frameworks for crypto use, and so on. One of the latest developments in the crypto legislation space has to do with crypto casinos.
A decade ago, casinos that dealt in crypto were mostly a rarity but now, they are far more commonplace. Around the world, more laws are being passed to reflect this reality and protect both consumers and the casinos themselves.
The United States
In the US, cryptocurrency has not been recognized as legal tender, though it is legal to use for commercial purposes. In terms of cryptocurrency being used for online gambling, this varies from state to state. In states like Connecticut, Delaware, Michigan, and New Jersey, online gambling is completely legal so the use of cryptocurrency for gambling does not come with any issues.
Some states like Oregon and Indiana have trickier laws regarding online gambling and so, residents may be able to access crypto casinos there. In states like Alabama and Alaska where online gambling is completely banned, crypto casinos cannot operate or be accessed in any capacity. As of 2023, there is only one legal online sportsbook that accepts cryptocurrency, though there is a push to allow for more establishments to open.
To get around legal restrictions, many US residents are known to access casinos based outside of the country or their state. If more comprehensive crypto-gambling regulations are passed, this could change soon.
In terms of taxation, there are no comprehensive laws specifically relating to cryptocurrency gambling, but all earnings from crypto are subject to both Federal and State Income Tax, as well as capital gains tax if the tokens are sold.
The United Kingdom
For years now, the United Kingdom has had ambitions of becoming the world’s next big crypto hub. At the same time, some of its current proposed crypto legislation seems counterproductive to this goal. For starters, some British lawmakers are looking to have all cryptocurrency transactions categorised as gambling. Following the FTX and Terra collapses of 2023, many lawmakers want to take a stricter stance on cryptocurrency while others are pushing for crypto to be categorised in the same way as traditional stocks.
How this situation will unravel is yet to be seen, but it is worth noting that there are no licensed crypto gambling sites in the United Kingdom. Despite how popular betting is within the country, most residents rely on crypto gambling sites based outside of the U.K. to get their needs met. Cryptocurrency is currently legal to use, but there have been instances of U.K.-based banks forbidding crypto transactions or closing accounts with any associations to cryptocurrency.
Depending on how crypto regulation emerges within the U.K. over the next few years, we could see some home-grown crypto casinos pop up soon or consumers might be pushed even further towards offshore sites.
Winnings from bitcoin casinos are subject to either Capital Gains Tax or Income Tax should the tokens be sold for fiat currency, although traditional gambling winnings are tax-free in the UK.
Asia
The state of crypto gambling in Asia is quite complex and not the same from one country to the other. For example, cryptocurrency is completely banned in China and so is gambling outside of the region of Macau. Partaking in either can attract penalties and so, neither is freely available to residents. It is not unheard of for citizens to use Virtual Private Networks (VPNs) to access these sorts of services in other countries.
In Japan, cryptos are allowed but online gambling by Japanese companies is not. As such, residents typically log onto gambling sites based outside of Japan, some of which accept cryptocurrency deposits.
In India, gambling is only legal in two states (Goa and Sikkim) but cryptocurrency use across the country is quite high. As such, many residents look to sites outside of India for crypto gambling. There have been discussions over the last few years of a national cryptocurrency being launched and if this happens, they could also be used within the legal online casinos in the country.
Africa
Just like with Asia, the state of crypto casino regulations in Africa largely differs among individual countries. In countries like Tanzania and the Congo, cryptocurrency is completely illegal to use, so there are no provisions for crypto gambling. The same goes for countries like Somalia and Egypt where gambling is forbidden. In those cases, residents will either have to access sites based outside of their countries while running the risk of prosecution by the law.
There are, however, countries like Nigeria, Senegal, the Seychelles and South Africa where both cryptocurrency and gambling are legal. Even then, the status of crypto casinos is tricky. In South Africa, online casinos and sportsbooks are not legal, while they are in Nigeria.
In terms of taxation, many African countries are catching up with the growing use of crypto. In Nigeria and Morocco, tax laws have been introduced that take cryptocurrency into account, so gains from crypto gambling may be subject to capital gains tax amongst others. Countries with high levels of crypto use seem to have been deliberately introducing new laws to capitalize on the industry and the crypto gambling scene in Africa will likely expand moving forward.