Why all crypto casinos should get a gambling licence
Online casinos need a gaming licence to operate legally in their target countries. Some countries with more developed gaming sectors have their own licences, some are happy to accept casinos with the most widespread licences, like the Curacao eGaming or MGA, and some restrict online gambling altogether. And then there are (some) online crypto casinos, that currently seem to fall in a legal grey area, and operate without a licence.
Different authorities issue different gambling licences and therefore have different conditions for acquiring a licence. Most check financial stability and history, require at least some sort of gambling addiction measures and minor protection, allow games only from licensed game providers and conduct regular audits of casinos to make sure they abide by the rules and regulations. Of course, some regulators go way deeper and can be much more detailed, but the basic idea of any licence is to regulate the igaming market and to ensure casinos treat players fairly, obey all applicable laws and aren’t involved in any illegal activities.
When it comes to online crypto gambling (or simply bitcoin gambling, since bitcoin is the most widely used crypto), all laws and regulations become a bit vague and confusing at best. Although bitcoin has existed for well over 10 years, most countries are still unsure what to make of it.
Some countries, like El Salvador, have adopted bitcoin as their official currency. South Korea restricts all crypto, but allows crypto exchanges. The UK allows crypto, but is very strict when it comes to crypto gambling. The European Union is still discussing crypto regulation. So the entire crypto matter becomes confusing even before we start talking about online gambling.
Like with any other new technology, the technology is developed, gains popularity and gets a user group first, any and all regulations and guidelines follow later, when the technology starts showing its first use cases. The same is with crypto.
Gambling regulations, like everything else, have been built around fiat currencies. And just like regulations about crypto in general, most gambling regulations have yet to include crypto. A gambling licence is necessary for any igaming business to pass the application for a merchant bank account, to be able to work with electronic payment systems and to use gaming content of the biggest game providers. When an online casino works with crypto only, all payments are made via e-wallets, with no third party services involved. Bitcoins (or other crypto) move directly between the player’s and the casino’s e-wallets.
By developing their own games as well, crypto casinos have basically eliminated the requirement to present a gaming licence to any financial institution or software development company. So, when it comes to crypto gambling in any sovereign territory, one could argue that a gambling licence becomes optional as long as crypto is not entirely prohibited.
In reality of course, the situation is not that simple, as online casinos require a licence for other purposes besides financial transactions and gambling software. But since most regulations don’t mention crypto at all, they place crypto casinos in a legal grey area, making them neither legal, nor illegal.
For that reason, the first crypto casinos began as very small gambling platforms, offering only a couple in-house games and accepting a few of the largest cryptos at the time, namely bitcoin and ethereum. Even though they lacked a licence and looked very different compared to their fiat alternatives, the crypto community embraced them enthusiastically, because they were the first to offer cryptocurrency gambling on a larger scale.
Crypto was on the rise and probably no one had any idea how this would play out in the online gambling market. But it turned out that the anonymity, and on the other hand the transparency, that is offered by crypto payments, was very attractive to a lot of players. Coupled with low transaction fees and almost instantaneous payments, a lot of players grasped the opportunity and thus started moving the crypto gambling train that soon evolved into the crypto casino scene as it is today.
A few years later, when the number of crypto casinos grew and more and more fiat casinos converted to fiat-crypto hybrids, even gambling regulators made their first move to welcome crypto casinos. For example, Curacao eGaming, being the most popular jurisdiction due to low cost and easy market entry points, allows operators to work with any crypto they choose.
By accepting the responsibility of controlling cryptocurrency operations on gambling websites, they were among the first to enable crypto casinos to get a licence and operate legally anywhere within their jurisdiction, or at least a bit more outside of the grey area.
Even though some crypto casinos still operate without a licence, a lot of players perceive crypto casinos as any other casino and want to make sure their funds go to a reputable and secure operator, where their rights are protected by an independent authority. Having a valid gambling licence therefore becomes a valuable marketing and player protection tool that gives value to the casino’s reputation and increases player loyalty.
I’m positive that it’s only a matter of time before other gambling jurisdictions adopt and include crypto as well, and crypto in general becomes more widely accepted and regulated in other markets. This will bring crypto closer to more people and make crypto casinos a fair alternative to fiat gambling sites.
Adam is a gambling enthusiast and the head affiliate at Gamblineers, the online crypto casino guide. His passion is anything that needs calculating and charting, his goal is finding new opportunities and he believes that crypto is the future.