Crypto casinos are becoming popular as the general adoption of digital assets increases. These casinos are choice options among members of the crypto community who hold crypto assets and prefer to spend their crypto instead of fiat. Crypto casinos offer users as much excitement and fun as they would enjoy in traditional online casinos, with alternative payment options via supported cryptocurrencies. However, these services are subject to changing regulations in the digital asset space, which may sometimes threaten their existence.
What is a Crypto Casino?
A crypto casino is an online service that allows users to play casino games by depositing funds using digital assets rather than fiat currency. Some traditional online casinos may have recently started allowing players to use crypto, but there are also actual BTC sites that have launched fairly recently and only accept crypto payments. Some crypto casinos also allow their customers to make crypto withdrawals, and may support wagering via assets like Bitcoin (BTC), Ether (ETH), and Tether’s USDT. These casinos cater to crypto holders and offer numerous advantages.
One major advantage is reduced transaction fees. Since cryptocurrency payments are cheaper, users can play longer and get more value for deposits without worrying about costly transaction fees. Paying out earnings is also cheaper for the casino because transaction charges are minimal, allowing casinos to offer attractive bonuses and exciting perks. For instance, there are crypto casinos that offer welcome bonuses of up to $10,000 or 1 BTC (currently over $27,900) in some cases. Other sites boast of weekly reload bonuses, cashback rewards, and welcome bonuses up to 200% of the initial crypto deposit.
Are Crypto Casinos Legal in the US?
The legality of crypto casinos in the US is complicated. While no law outrightly bans crypto casinos, it is necessary to consider each state’s stance towards cryptocurrencies and online gambling in general.
Many US states have adopted legislation that permits gambling but with a few restrictions. For instance, most states enforce broad laws requiring online casino operators to ensure that all players are physically within state borders using geolocation tools. However, other states enact additional regulations that are more straightforward. In Delaware, for example, only state racinos can set up online gambling services. In addition, Delaware does not allow players to place sports bets online.
As of August 2023, online gambling remains prohibited in more than 10 states, even though many of them, including South Carolina and Hawaii, have proposed unsuccessful bills to legalize the activity. In states where one or more forms of online gambling are permitted, the legality of crypto casinos may depend on the state’s crypto laws. In most states, no legislation prevents online casinos from receiving deposits or paying winnings using crypto. For crypto gambling specifically, much of the legislation is unclear because many states do not have robust cryptocurrency laws.
Several US states have crypto-friendly laws that support the adoption of digital assets. For instance, Utah passed a bill in March that allows local and state government agencies to accept crypto payments. In Idaho, the state legislature passed the Digital Assets Act, which establishes a crypto regulation framework and excludes cryptocurrencies from requirements stipulated by state securities laws.
In Virginia, the state governor signed a bill in April that allows financial institutions to hold cryptocurrencies for customers if they have adequate risk management measures. Crypto casinos in states like Virginia may attract a large audience of customers since the laws support online gambling and crypto adoption.
Crypto Casinos: Licensing and Taxation
Online casinos require licenses to operate whether or not they support cryptocurrencies. Those receiving or paying out crypto deposits or winnings may also have to obtain licenses that allow them to custody cryptocurrencies on behalf of their customers. However, these requirements may vary between states. For instance, Nevada requires all businesses handling crypto to obtain a money transmitter license from the Nevada Department of Business and Industry.
Currently, there are no specific laws on taxing crypto gambling in the US. However, there are tax requirements for gambling in general. For instance, gambling winnings are usually subject to federal and state income tax requirements. When filing taxes, all winners must report earnings as “other income” on Form 1040. Players may also report losses as itemized deductions on Form 1040 Schedule A. However, gamblers should note that losses will only reduce tax payable if all itemized deductions exceed standard deductions. In addition, players are advised to keep track of all gambling activity to correctly file taxes, as online casinos may not automatically withhold taxes.
Conclusion: Gambling Legally
Gambling is a heavily regulated activity in most states. While states like Connecticut, Delaware, and Nevada allow online gambling, others like Alabama and California do not permit casino operators to offer services online. For crypto gambling, interested players must be sure that a state has laws that allow online gambling and permits establishments to handle cryptocurrency payments. Players are generally advised to pay attention to the constantly changing laws on online gambling and crypto custody in individual US states.
