Cryptocurrencies have made their mark within the gambling industry as they continue to grow in adoption all around the world. That’s because the popularity of these digital coins has led to them being adopted on many betting platforms, such as online poker rooms, sportsbooks, and casinos.
The availability of these platforms has made many people wonder how the UK’s legal landscape views these sites. That is why we’ll be discussing the regulations that control crypto gambling in the UK and assess the challenges and opportunities these regulations have presented to both players and operators.
Legal Landscape in the UK
To make matters clear as we start, crypto gambling is allowed in the UK. This means that players can legally bet using crypto and sites under the UKGC’s authority are allowed to accept crypto. The UK Gambling Commission framework states that it’s not illegal for UK-regulated casinos to accept digital currencies. However, because the UKGC imposes extremely strict rules around crypto, barely any of these casinos actually accept crypto. As such, most players opt to visit UK crypto casino sites that are licensed elsewhere and enjoy the benefits that crypto expert and author Kane Pepi says these platforms offer, such as wide game selections, betting with different coins, and welcome bonuses.
Even though crypto gambling is allowed in the UK and highly regulated, the government is still looking to introduce even more regulations to this sector. What has created a need for further regulations is that the UKGC wants to address the inherent risks that come with cryptocurrencies, such as price volatility. Because of these regulations, most players prefer to wager at offshore crypto casinos which are licensed and regulated in countries with more lenient laws.
To address these risks, Economic Secretary Bim Afolami has announced that there are going to be new laws coming by July 2024 that will introduce new regulations to the crypto industry.
Along with these upcoming regulations, the UK is also planning to encourage investment and innovation in its crypto-gambling space as there aren’t local options for players yet. This is why the government is not planning on reversing its permissive regulatory framework, as it still wants to attract crypto entrepreneurs, startups, and investors.
What Gamblers Need to Know
Now that we know that crypto gambling is allowed in the UK on both domestic and offshore sites, let’s see what gamblers need to know about this space so they can play safely and stay on the right side of the law.
Firstly, what gamblers need to know is that even though the UK allows crypto gambling, this space is largely unregulated. That means even though many crypto gambling sites operate legally, they can still access platforms that don’t comply with existing gambling laws. This is why bettors need to be careful and only play at licensed and reputable sites.
To ensure that they play at reputable sites, gamblers need to know what precautions they must take to protect themselves from fraudulent betting sites. Here are some of them below.
- Verify Legitimacy: Bettors always need to verify the legitimacy of the gambling sites they’re considering before making deposits. They can do this by checking if the platforms they want to play at are licensed and by reading user reviews to see if there are any red flags.
- Stay Vigilant: Gamblers also need to be on the lookout for fake gambling ads and phishing emails trying to scam them or get their personal information.
In addition to ensuring that they only bet at reputable sites, gamblers also need to keep their wallets safe. Here’s how they can do this.
- Secure Wallets: Players must always use wallets from reputable providers that come with two-factor authentication and robust encryption. Storing their winnings in a secure wallet will ensure that player funds remain safe from unauthorised access.
- Avoid Exchanges: Gamblers must also refrain from keeping their winnings on exchanges as this can be risky. That’s because exchanges can fall victim to security breaches and hackers, so it’s always better to keep cryptocurrencies in a personal wallet.
Crypto gamblers also need to know about the tax requirements they have to ensure that they don’t fall short of any laws. Let us see what they are below.
- Capital Gains Tax: Any profits made from crypto in the UK are subject to a capital gains tax. However, any losses players make can also be accounted for so the tax can be adjusted.
- Record Keeping: Crypto bettors are also required to keep accurate records of crypto transactions, including the bets they made.
What Operators Need to Know
Since we are now aware of what the law says about crypto gambling and what bettors need to know, let us see what the law requires from operators so players can know what to expect from legal platforms.
One of the regulatory requirements that crypto gambling operators have to follow in the UK is anti-money laundering processes. These processes include implementing some form of player identity verification and carrying out customer due diligence.
Operators are also required to report all suspicious transactions to the authorities. Transactions can be classified as suspicious if they appear disproportionate, unusual, or inconsistent with player financial profiles. By requiring this from operators, UK lawmakers hope to prevent illicit activities and bolster the integrity of their financial systems.
