The rise in popularity of cryptocurrencies has seen them become more accepted as a payment form for merchants around the world. The gambling sector is one of the industries accepting the digital currencies, but for UK punters, they are usually found at non-GamStop casinos. Since the UK Gambling Commission brought in new regulations to clamp down on problem gambling, overseas casinos have become more popular with UK consumers.
Part of the UKGC’s efforts has been to reduce payment options with the ban on credit cards, while the large gambling brands in the UK have shied away from cryptocurrencies. The advantages and disadvantages in using digital currencies will be discussed in this article.
How Do Cryptocurrencies Work at Online Casinos?
Cryptocurrencies are becoming more popular, and acceptable, as a payment form and this was boosted by the online payment platform PayPal. Users can now buy and sell cryptocurrencies, while merchant accounts can accept them as payment on the site. With many investors seeing gains on their digital investments, some are seeking to cash out some of their gains. Online gaming has been an early adopter and welcomed digital currency investors.
One of the benefits of using cryptocurrency is the anonymity of transactions, although this option can be eliminated by KYC requirements at casinos and although a payment can be sent anonymously from a crypto exchange, it would land in the user’s account. The holders of digital coins should consider whether putting digital money through KYC restrictions is the best use of the technology.
Casinos not on GamStop have offered their support for cryptocurrency deposits and will have designated cryptocurrency addresses which users can send their coins to, much like a bank transfer. Users must first buy the coins through a digital currency exchange such as Coinbase or Binance, however PayPal is now an option. Casinos have been expanding their offerings from only BTC and now offer a range of coins such as ETH, LTC, and DOGE. Coin holders are also looking to avoid costly fiat exchange fees when withdrawing their coins to their bank accounts.
How Are Cryptocurrencies Restricted at UK Casinos?
The UKGC implemented rules in 2016 allowing Bitcoin to be used at online casinos. The ban on credit card deposits was done to protect problem gamblers, but we they could be accused of closing one door and opening another which is less regulated.
The reality is that gamblers often like to separate gambling transactions from bank accounts in order to avoid the stigma of betting when they apply for mortgages or loans. Banning credit deposits can be helpful to protect problem gamblers, but it punishes those who are more comfortable with their habits. Some of those gamblers have moved to use credit cards at overseas casinos but cryptocurrencies are now another option.
At present, the UK financial regulators have still not clarified how they will treat blockchain currencies, but the European Central Bank have recently called for global regulation. The US has been moving towards regulation and taxation, while the deputy governor of the Bank of England said that Bitcoin was close to becoming a ‘threat to financial stability’.
Without clarity, the larger UK gaming providers have avoided cryptocurrencies, but they are now becoming more mainstream. Until regulation is concluded, casinos not on GamStop will remain popular because they are offering another deposit option but the problem is that they can be used as a GamStop loophole.
UK casinos without GamStop on non-gamstop-casinos.com are based in Europe, or more recently in Latin America. The rise of the internet and faster computing technology has brought non-GamStop casinos to our homes and mobile devices, and the businesses no longer need physical locations. There is also the benefit of more suitable climate and taxation rules. European firms are generally more regulated and require thorough identity checks, but maybe with less limitations on crypto withdrawals. Latin American firms usually offer a looser regulatory environment and users can setup an account without any ID or proof of address in some cases. These would allow users to make use of the anonymity of crypto transactions.
Users should apply some due diligence to any sites that they are signing up to. There are plenty of legitimate companies out there, but also some less than reputable ones as in many online sectors.
Should Cryptocurrency Casino Transactions Be Tracked?
The irony of using cryptocurrencies with KYC is that it defeats the initial design of having decentralized money. The goal was to provide a payment form that was free from central banking power and the glare of regulators and tax-hungry governments. Those parties point to tax avoidance and black-market activities as the reason for restrictions, but that existed with paper dollars and the large banks were guilty of many crimes such as money laundering and rigging financial markets.
There is a currently a push by the Bank of England and other global central banks to create their own central bank digital currencies (CBDCs). The BoE has even said that ministers should vote on whether they should be programmable. That would mean that the government could ban deposits to non-GamStop, or UK casinos, based on social concerns.
At present, a CBDC is likely to be two or three years away and there are many investors who have gained from their cryptocurrency investments. Those investors are looking for outlets to spend their tokens and casinos are one of those. While regulators drag their feet, sites not on GamStop will likely benefit, while problem gamblers have another loophole for GamStop rules.
The use of non-GamStop casinos has become more popular as gamblers feel restricted by the latest UKGC regulations. It is right that they tackle problem gambling, however, applying a one size fits all approach doesn’t help those who are comfortable with their gambling habits. A blanket ban on credit cards was one of those rules that could’ve been handled better and drives business away from UK sites.
The use of cryptocurrencies is still limited in the UK and regulators are still working on plans to deal with digital money. The non-UK sites will benefit while this is the case and there is a risk that problem gamblers will use the coins as a loophole to avoid the self-exclusion rules.