The United Kingdom has a deep history of gambling that goes back to centuries, so do the efforts to regulate it. Regarding the regulatory framework of crypto-based casinos, the UK’s Gambling Commission (UKGC) has one of the most well-organized legal systems in the world. While not explicitly endorsing cryptocurrency gambling, the UK takes a middle-ground approach to stabilize the crypto casino environment.
It is important to notice that cryptocurrency doesn’t have any separate provision in the gambling law. However, the Gambling Act of 2005 allows licensed operators to receive cryptocurrency deposits as long as they comply with robust anti-money laundering protocols.
Are Crypto Casinos Legal? How Gambling Act Of 2005 Apply To Crypto Casinos?
The Gambling Act 2005, which applies to England and Wales, and to Scotland, was approved in 2007 as a means to control all forms of gambling. As a law that was passed before the arrival of cryptocurrency, it does not specifically mention online crypto casinos. However, they fall under the category of remote gambling in the Gambling Act, making them legal.
In 2020, the UK government requested a review of the act, primarily intended to modify the act according to the digital age of blockchain technology and cryptocurrencies. With the arrival of new forms of technology and nuanced gaming experience, UK citizens expect an amendment to the law.
How Crypto Casinos Are Licensed In The UK? Eligibility Requirements
Crypto Casinos in the UK are licensed and regulated by UKGC, along with all other kinds of gambling. Casino operators should first apply for a license, and the commission will check whether the platform obeys all the conditions mentioned in the Licensing Conditions and Codes of Practice (LCCP), which include:
- Remote gambling equipment should be accessible to the commission, and the software must be sourced from licensed operators.
- Gambling must be fair and transparent, complying with the Consumer Rights Act of 2015.
- The licensees must not accept credit cards from customers, and a clear policy is required for fiat and crypto deposits.
- Licensed casinos should display their licenses on all platforms while advertising and the ads should not be placed on any illegal or spammy websites.
- The platforms should keep all the data for auditing, and strict anti-money laundering measures should be implemented.
- Staff must cooperate with any inquiries, and any key business changes must be reported to the commission.
- The software of the platforms must adhere to the Remote Gambling and Software Technical Standards (RTS).
- KYC is mandatory. Casino operators should obtain the information and verify the identity of a customer.
Risks Associated With Unregulated Crypto Casinos
If any crypto casinos meet the requirements mentioned above, they can legally start providing their services. However, it is reported that various gambling platforms operate in the UK without any license. While these unregulated platforms could face legal action, it is very difficult to trace and penalize them. Let us break down the risks associated with unlicensed crypto casinos.
Hacking Concerns:
Various illegal play-to-earn gaming platforms have looted millions of players by tricking them into adding funds to their accounts. Even if the platform is fair, it still is vulnerable to hacks and loss of customer funds due to the lack of an audit regarding the security.
Unfair Gaming:
Unregulated casinos without any UKGC oversight usually won’t provide any provably fair system to ensure randomness in gaming. There are high chances for the operators to manipulate the outcomes of the games.
Money Laundering:
Due to the anonymity that crypto transactions provide, it has become a favorite realm of money launderers and other financial frauds. Without any investigations from the authorities, this could lead to an imbalance in the global economy.
Lack of Support:
Unlicensed fair crypto casinos are less user-friendly due to their lack of customer support and delays in withdrawal. Also, they won’t offer any guarantee to your funds.
Future Of Crypto Casinos In The UK: How Gambling Regulations Will Evolve?
As an evolving landscape, authorities in the UK are very keen on crypto casinos, introducing strict regulations to ensure the platforms function well by protecting the customers. According to the latest sources, the regulatory authorities are in the process of reconstructing the regulatory framework by implementing digital identity verification, taxation in crypto winnings, and integration of stablecoins.
With the rise of DeFi (decentralized finance) platforms, we can see regulators creating distinct laws specifically intended for blockchain-based casinos. Users expect the officials to prevent emerging illicit gambling activities, providing them with safe foundations and innovations.
Conclusion
Crypto casinos are technically legal in the UK, but an updated regulatory framework is needed solely for blockchain-based gambling platforms to ensure safety and security. While most of the platforms are licensed and adhere to the Gambling Act of 2005 and UKGC guidelines, it is important to take strict actions against unregulated platforms trying to loot customer funds.