Online Gambling and Cryptos – Are They a Bridge for Non-UK Casinos?

Cryptocurrency---Bitcoin

Non-UK casinos have become a popular option for gamblers in Britain since the UKGC got tougher on the sector. One of the features was a lengthy self-exclusion program in collaboration with GamStop, other measures included a ban on credit cards.

These efforts in the UK have been taken to protect problem gamblers but they can open the door to casinos overseas that are lightly regulated. These will offer credit card funding and cryptocurrencies in many cases, but they can be dangerous for problem gamblers.

There are advantages and disadvantages to using non-UK casinos and we will explore both in this article.

How Do Cryptocurrencies Work at Online Casinos?

The use of cryptocurrencies is starting to expand into many areas of commerce, and the gambling industry was one of the first to offer support. The UKGC supported them back in 2014, but more recently, UK banks are clamping down and that keeps the large casino names away. The majority of online merchants still don’t accept cryptos as payment, so online gaming is still a popular outlet to spend profits from digital currencies.

One benefit of using crypto is that it offers anonymity in transactions, however, this option is pointless if the customers’ account adheres to KYC requirements and gamblers are really just looking for an outlet to spend their coins. Digital coin enthusiasts should really consider whether running digital money through KYC is the best use of the technology.

Non-UK Casinos have been increasingly offering their support for cryptocurrency deposits and will have a designated Bitcoin address. Users can purchase coins via an exchange such as Coinbase, or Kraken, and then send those in a similar fashion to a traditional bank transfer. The speed of the transfer will depend on the coin and casinos have been expanding their offerings from BTC to a range of coins such as ETH, LTC, and DOGE. Coin holders have also been trying to avoid costly fiat exchange fees when they withdraw coins to betting sites.

How Are Cryptocurrencies Treated at UK Casinos?

The UKGC banned credit card deposits for British gamblers and that was an unpopular move for many. The goal was to protect problem gamblers, but many other users like to separate gambling transactions from their bank account in order to avoid stigma when applying for a loan or mortgage. This is typical of the UKGC approach, which is like using a sledgehammer to hit a nail. It is fine to protect problem gamblers, but their measures also affect those who are move comfortable in their gaming habits. 

UK casinos using Bitcoin and other cryptos would require strict KYC checks and the anonymity of transactions would be lost. At present, UK financial regulators are still not unified on their approach to blockchain currencies. The European Central Bank Chief Christine Lagarde did call for global regulation of the coins. The US is also taking a more active stance and until there is an agreed approach to digital coins. Until regulation is concluded, UK firms will avoid them because they will not want to upset their shareholders if an exchange went bust and cost the firm money. Casinos not on GamStop will remain popular while they offer these extra funding options.

How Are Non-UK Casinos Handling Cryptocurrencies?

According to experts from this website, the most common visited casinos other than those regulated by the UKGC are often those based in Europe, or more recently in Latin American countries such as Costa Rica or Curacao. The rise of computing technology and faster internet has brought online gaming into our living rooms and our mobile devices, which also means that casinos do not need a physical presence and many companies are setting up in countries that offer improved climate and taxation. European firms will have more regulation than South American providers but will have less limitations on crypto withdrawals. Latin American firms operate with a looser regulatory environment and British users can setup an account without much need for ID or proof of address etc.  

Users must keep these issues in mind and apply their own due diligence to find safe casino sites. Google searches and online forums can help. The companies overseas are not allowed to market in the UK but are easily found online. 

Should Casinos Track Cryptocurrency Transactions?

The irony of using cryptocurrencies at casinos is the KYC requirement and it defeats the original design purpose of having decentralized money that offers privacy from the increasing tentacles of big brother. It is fair that casinos should be held to the same standard as other financial-related firms to stop tax avoidance and black-market activities but tracking transactions would likely not be frowned on by the blockchain architects.

The reality is that many cryptocurrency holders have seen good profits from the bull run since 2020 and are looking for ways to spend it. Withdrawing cryptos to fiat currency can come with costly exchange charges and this would be a reason for crypto deposits to gambling firms.

Conclusion

The use of Non-UK casinos has grown in popularity as British gamblers react to the tightening of regulations in the UK. The problem gambling issue affects a very small minority of bettors, but the UKGC has gone heavy in ‘burning down the barn to find a mouse’. The one size fits all approach is never the best idea, but it is the new reality. Those who are comfortable with their gambling habits are being punished with funding restrictions and a higher level of in-game regulations such as spin timers and bet sizing limits. 

The use of cryptocurrencies is still limited outside of the digital exchanges because financial regulators are still undecided about how to tackle digital money. This means that UK casinos will avoid them to avoid trouble with shareholders. For problem gamblers, the use of cryptocurrencies shouldn’t be used as a loophole to get around the GamStop rules. For others, they will still be popular as a means to find more freedom, but gamblers should maybe consider whether cryptos are the best funding option for a flutter.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.