Bitcoin gambling laws and jurisdictions

bitcoin-gambling-laws

There are no specific laws relating to gambling with bitcoin. As such we assume that gambling with bitcoins falls in the same legal category as gambling with government currency. If online gambling with your local currency is legal where you are then online gambling with bitcoins is also legal where you are. If online gambling is illegal where you are gambling with bitcoins has the benefit of being anonymous.

Politicians are mostly out of touch with the realities of online gambling. This can be seen in the patchwork of confusing legislation that might relate to online gambling and the fact online gambling is popular in every country where it is banned.

Many experts recommend liberalisation and regulation with a taxation to raise government revenue and provide consumer protections. These recommendations have been ignored by many governments due to the lack of public interest and the moral and religious influences that make gambling laws politically sensitive.

Will governments try to stop bitcoin gambling?

Individual gamblers will not be the target of law enforcement. There have been many crackdowns on online gambling in various jurisdictions but these crackdowns have always been against the operators never against the individual users. The US Department of Justice seizure of Full Tilt Poker, Pokerstars and Ultimate Bet is a standard example, the authorities went after the gambling sites not the individual users.

The US Department of Justice’s method of attacking government currency gambling operators that it does not approve of is to cut off the user’s ability to deposit and withdraw. They do this by penalising payment processors and financial institutions if they allow payments to gambling operators.

This is not possible with bitcoin gambling operators so if authorities want to move against them they will have to resort to domain and server seizures and physical raids.

Even these extreme measures will not stop bitcoin gambling as censorship resistant technology, such as namecoin decentralised DNS and maidsafe decentralised hosting are being developed. These censorship resistance methods are evolving faster than a the government bureaucracy can respond to them.

Bitcoin gambling licenses

Companies with licenses to offer online gambling globally argue that other nations local gambling laws do not apply to them. They are only required to follow the laws in the jurisdiction in which they are licensed and located not wherever their users are.

Contrary to this some lawyers argue that having a website available in a country and accepting users from that country means a business is operating in that country, even if that businesses servers and licence are not located there.

Attempts by politicians, media and local gambling operators to paint offshore sites as unlicensed law breakers are self serving and meant to protect incumbents and tax revenu. Just because a company is not separately licensed in every nation in the world does not make them unlicensed if they have a licence to offer their product globally from their home jurisdiction.

There is no reason to think because an operator does not have a licence in your country that it must be a shady and unlicensed operator. Other jurisdictions have strict gambling laws, licensing regulations and player protections and many high quality, safe and law abiding gambling sites operate under them.

Given most bitcoin gambling operators allow users to be anonymous they can not comply with licences that require know your customer ID verification procedures which involve collecting and storing user’s identity and personal information.

Real world experience such as the Sports Alive debacle in Australia, Full Tilt Poker and the Ultimate Bet scandal shows us that a licence is no guarantee of competence, honesty or legal protection for customers if things go badly.

Where are the licensing jurisdictions and operators located?

Low taxing international centers for online gambling licences include

  • Alderney
  • The Northern Territory in Australia
  • Curacao
  • The Isle of Man
  • Gibraltar
  • Malta
  • Montenegro
  • The Philippines

The main centers for the bitcoin gambling industry are

  • San Jose, Costa Rica
  • Panama city, Panama
  • Manila, Philippines

Having a gambling licence somewhere does not mean the company has to be wholly located in that jurisdiction. They only need to have the servers on which the bets are being placed there. Often this is just a token server holding a site back up and the real live servers are located wherever is best for the business.

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3 Comments

  1. Anonymous 5 months ago

    This is a v well laid out site etc, and I am genuinely intrigued by using a Bitcoin sports site. Trying to access one, I usually get a msg, saying this site is not allowed, from the UK. How do people get round this ?

  2. Insil Chang 4 months ago

    The online bitcoin gambling is legal in Panama and in Costa Rica. I am also checking the Ireland and Isla of Man.
    The Korean Team wants to set up the online bitcoin gambling as a legal entity and move the main server in the country once we finalize the company set up. The reason we gave up setting in KOREA is that the tax rate is out of control.
    I was told that it seems hard to get the bank accounts since all banks in Panama are directly linked to the banks in USA .
    My friends told me that If we invest between USD one million and USD 5 million into Costa Rica, not only we can set up the company and but also we can open the bank accounts legally.

    I want to know which country is good to set up the legal entity to do online gambling business and obtain the license and move the main server etc.

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