Is gambling with Bitcoin legal? Are gambling winnings in the form of cryptocurrencies taxed in any way? These and other related questions naturally come up when somebody is about to dive for the first time into the world of crypto gambling.
However, there is no definitive answer for any of them since crypto regulation is different in every country, just like laws on online gambling. In any case, we at CryptoGambling.TV have researched the situation for both aspects in several countries, so you can get the wide picture. Let’s dive in.
Our team constantly monitors new developments on the international crypto gambling scene. We will update each country’s article as soon as further information becomes available and then properly review & cross-check it. Feel free to contact us if you find anything amiss.
Keep in mind that the iGaming industry, and especially the crypto scene, are two fast-paced environments where new developments may happen overnight. We recommend always doing your own research on top of our available articles. And especially for tax reasons, you should always contact a financial advisor to be on the safe side and maintain your peace of mind.
Most of the time, they are neither legal nor illegal. New Bitcoin casinos & bookies usually stand in a grey area. Μost crypto-friendly brands hold a license from an overseas jurisdiction, like Curacao or Costa Rica, that many countries do not recognize as legitimate licenses due to active local regulations. Also, cryptocurrencies are not classified as currencies in most nations, so transactions can not be easily monitored.
In short, we have not located any laws regarding crypto gambling specifically, so we can presume that most lawmakers will treat crypto regulations on gambling in the same way as gambling with regular government-issued FIAT currencies.
What’s the global Crypto Regulation
Currently, there are no international rules regarding crypto fund transfers. Just like in gambling, the authorities of each country decide how to handle these affairs locally. Also, in contrast to regular bank transfers, crypto transactions can be completely anonymous and instantaneous. The blockchain networks that settle each and every transaction do not recognize any laws and borders, much like the internet. Most of them are 100% neutral and impartial.
Nevertheless, do not feel confident that you can proceed with any action you wish. While they are undoubtedly anonymous, most blockchains are also fully transparent, meaning that everybody can track every transaction. If someone learns your crypto wallet’s address, they might get access to your current balance and history of transactions.
Also, while just a few years back, the crypto space was synonymous with anonymity just a few years back, now the situation has changed. New crypto regulations imposed from several nations require centralized exchanges to proceed to KYC checks for their customers. Furthermore, fiscal authorities and governmental agencies are becoming increasingly efficient in detecting crypto transactions.
While there is not a global crypto regulation, countries are heading in the same direction in the aspect of monitoring and auditing crypto fund transfers. Of course, they are still highly safe and protected, as usually only high-profile individuals get thoroughly inspected. Regular players making normal transactions to crypto casinos can easily stay under the radar, provided they follow some common precautions, which we will analyse later on.
How does the crypto tax rate for gambling winnings work
In most situations, profits or losses from trading crypto-assets should get reported on your tax return form to get processed according to the current fiscal laws of your country. Pretty much like other assets such as stocks and bonds. However, crypto profits (or losses) from gambling activities are another thing.
In some countries, the tax return form includes a separate field where you can input profits from gambling income. In others, you simply have to declare it as ‘other income’ in the relevant field. But since cryptocurrencies are not considered a valid type of currency anywhere, how do you report them? Do you even have to? How can somebody calculate the correct crypto tax rate for their situation?
First of all, cryptocurrencies are a new phenomenon, like crypto betting sites & casinos. In the vast majority of countries, there is not yet a specific law that defines how to treat crypto gambling winnings. So, for the most part, you will need to combine the current legislation about online gambling and capital gains/losses. Be that as it may, the fact is that it is still very hard for authorities to track crypto fund transfers.
That depends on how you handle your crypto bankroll. In general, if you want to maintain a low profile and avoid any troubles, you should stay clear of centralized crypto exchanges. Just a few years back, someone could trade immense amounts of money without showing a single ID. Nowadays, due to the trillions of dollars that have poured into the crypto space, governments and international institutions have forced any centralized exchanges to conform to normal KYC standards, just like banks. So, in case of an audit, a crypto exchange can hand all of your purchases, trades and withdrawals to the authorities.
Nevertheless, they are still quite more discreet than traditional banking institutions, and regular users will rarely get audited. To be 100% on the safe side, you need to use centralized exchanges for FIAT onboarding. Meaning that after buying cryptos, you need to move them to a private wallet and then utilize only decentralized exchanges.
This will limit your ability to cash out any potential winnings in FIAT, though, as this can only be done in centralized exchanges. The best way would be to move back any amount in small fractions. Moreover, you should opt for exchanges that can issue a debit card, so you can spend your funds directly and avoid moving them back to closely monitored banks.
The point is that to avoid crypto taxes as much as possible, you need to stay off the grid. Private crypto wallets, decentralized exchanges & gambling platforms are your best friends. New BTC betting sites and casinos also hold more relaxed verification standards, even if they are centralized platforms. Regardless, you need to consider your safety too.
Can I be safe despite the unclear crypto regulation
As you may have already understood, the current crypto regulation on the gambling aspect is quite undefined in many countries. And while this might be good for someone that thrives in such an unregulated environment, as it is far easier to stay under the radar, it brings up several safety concerns.
We understand that many players can feel uneasy handling funds and play in an environment that resembles the wild west. Nonetheless, we firmly believe that the risk-to-reward ratio largely favours gamblers that have done proper research and are comfortable enough to handle crypto assets. Let’s review some of the aspects you need to take into consideration.
Do crypto brands need to have a license?
As you will see from our Bitcoin gambling reviews, most crypto-friendly gambling sites will either run under a Curacao license or be fully independent. Only recently, some brands that accept cryptocurrencies managed to receive an MGA license, but it is quite difficult and costly to obtain, so most new brands will not go that way. Generally speaking, while a reputable license is a strong sign of reliability, it is not an essential factor when picking crypto-friendly brands.
An operating license severely limits brands that want to stay true to the anonymous nature of crypto transactions. Even more relaxed licensing authorities like Curacao or Costa Rica require a certain degree of KYC checks. So the main thing you need to consider is community feedback.
Crypto-savvy crowds tend to be quite vocal on transparent social platforms like Telegram, Discord, Twitter and Reddit. Before you pick a brand, take a look at such community platforms to get an idea of what you are going to deal with.
How safe are decentralized gambling apps
When discussing maintaining a low profile in online gambling, we can not leave decentralized platforms (gambling dApps) out of the conversation. These platforms do not have a central organization behind them and operate purely on smart contracts (programmable code) on blockchain networks like Ethereum, Tron, EOS and Solana. This means they will never ask you for any document, as they do not have to abide by any crypto regulation.
The unpleasant part is that this scene is home to hundreds of scams. And there is not any form of protection here, so you are fully responsible for your actions. Again, the correct way to gauge which gambling dApp is to be trusted is by researching in-depth their online communities.
There, knowledgeable players that can understand the underlying code of a platform like this can share their findings, and other existing gamblers can discuss all the features. It is also very important to see representatives of such projects active in the community. However, we recommend this way of crypto gambling only for experienced users.
Keep in mind the following checklist before starting your crypto gambling journey. Remember though, this is a generic overview and does not apply to every situation unconditionally.
Move your funds to your private wallet after buying crypto from an exchange. Make sure the wallet supports the coin & the network you are about to use.
Never proceed to direct transactions between crypto exchanges and gambling sites. Due to high regulatory risk, exchanges will easily block your account to avoid potential disputes.
Do thorough research of any gambling site you are about to deposit in. Read our reviews, join the website’s Discord & Telegram and search any other relevant online forums.
Debit cards issued by crypto exchanges are a handy financial tool, as you will not have to move any funds back to regular banks, while still being able to use your winnings as you find fit.
What does the future hold for crypto regulation & online gambling
Cryptocurrencies, even if they are still in an early stage, seem to be the natural solution to the increasing gambling restrictions all over the world. However, the current grey crypto regulation that is constantly changing, coupled with the unstable crypto markets, needs to be considered, as they pose several concerns.
The truth is, though, that governments are too slow to be able to adapt to such vibrant and evolving industries. It seems that the crypto gambling scene will never be fully under control, so players will always get the chance to escape their local restrictions.
A non-regulated environment is also dangerous, as shady individuals and scammers always try to take advantage of unsuspecting newbies. Regardless of this fact, avid gamblers can easily protect themselves from any turbulent legislation and malignant entities.
Right now, players can play on international crypto gambling sites in complete privacy, receive payouts in mere seconds and claim valuable Bitcoin casino bonuses that greatly surpass those found in conventional websites. In short, the risk might be higher, but the rewards are undoubtedly worth it.
The more regulated online betting gets, the more players will seek alternatives that allow them greater freedom of choice. The pattern is that when a local market gets regulated, activity in crypto gambling sites from that country rises dramatically. So yes, legalized sports gambling, which usually means further restrictions, is a key factor in developing crypto gambling sites.
Most crypto casinos hold licenses from offshore jurisdictions, such as Curacao and Costa Rica, making them completely legal companies. However, their legal status in other countries depends on the gambling law of every separate country.
That depends on your country’s tax return form structure. In some countries there is a separate field for gambling winnings, while others do not take cryptocurrencies into consideration at all. For such sensitive matters, it is better to contact a tax consultant.
While in most countries cryptocurrencies are not designated as a valid form of currency, there are usually no laws that prohibit a business from accepting cryptocurrencies for products or services. However, some countries take more severe measures against cryptos, so do thorough research beforehand.
Cryptogambling.tv is the first site to fully empower crypto iGaming brands. Decentralized digital currencies are the answer to the restrictions that gamblers face worldwide. Your funds, your rules. At the same time, we accept no compromises, and promote only legitimate websites. Trust our expertise, become an avid crypto gambler and maximize your bankroll’s value.