Sports betting was one of the first industries that utilized cryptocurrencies as a payment method. Using cryptocurrencies to bet on sports events comes with many advantages for players – such as fast transfers, anonymous betting, and low fees.
Even though cryptocurrencies are now widespread and common, players should be aware of legal and regulatory matters. Not all countries allow sports betting, and using cryptos is somewhat limited in others. There’s also a matter of how the winnings are taxed. This article will go over these dilemmas and hopefully put the potential players at ease.
Is Sports Betting Legal?
This is no easy question to answer as it depends on which jurisdiction the casino is based in. Online casinos choose their base of operations based on the regulations in the country they’ve chosen and how easy it is to get the license needed to run a gambling establishment.
The US
The US doesn’t have a national law regarding sports betting. It’s regulated individually by the state, and at this point, 38 states allow sports betting while 12 don’t. It’s also legal for US players to use crypto sports betting sites abroad, regardless of where they are.
The winnings made from betting in this way are still taxed regardless of how your state regulates the matter.
Europe
European countries have national laws on sports betting, so each country has its own regulations. However, the regulations are pretty similar and pretty liberal in almost all European countries, meaning that you can play in almost all of them and across borders.
All European countries also have regulations regarding responsible betting and mechanisms that will stop players from abusing sports betting sites.
China
Gambling is illegal in China, but some exemptions include sports betting. This is because the local regulations distinguish between games of luck and skill, and sports betting is seen as a game of skill.
It’s also common for Chinese players to use VPNs to place their wagers at sports betting sites based abroad. Casino websites for Singaporean players often offer their services to Chinese players as well.
Latin America
Latin American countries have a mixed record on sports betting. Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Guyana, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela allow sports betting. At the same time, players in other countries use VPNs to access online sports betting sites abroad.
Football is a big part of local culture, and so is betting on it regardless of regulations.
Is Using Cryptocurrencies Legal?
Using cryptocurrencies is legal in the US, Europe, and Latin American countries. It can be used as a payment option, even though not all countries recognize it as legal tender. As long as the transfers themselves are legal and the sports betting sites are willing to provide services paid in crypto-, it’s legal.
How each of the countries we mentioned treats crypto when compared to fiat money depends on the country and currency. In general, you’re safe with most major cryptocurrencies such as Bitcoin, Ethereum, or Solana.
When it comes to China, however, things are a bit more complicated. Using cryptocurrencies isn’t legal in China. There are many reasons why this is the case, and the rules may not apply to some of the smaller currencies developed by Chinese businesses.
However, one of the best features of cryptocurrencies is that there are no centralized structures behind them, meaning that Chinese players can still have a digital wallet and use it to make wagers with the help of VPNs.
Sports Betting and Anonymity
One of the biggest reasons players decide to use sports betting sites based on crypto is that it allows them to make wagers without providing their real name. This isn’t the case with using fiat payment methods, as you need to have an ID and a bank or a card number in order to use those.
However, when crypto is more widely adopted, the laws are changing in this regard. There are “know your customer” laws made to prevent money laundering that some casinos are already applying. These require the player to provide an ID before signing up for an account in the first place.
Exchange Regulations
Exchange regulations are a key part of the crypto sports betting ecosystems. These are used as foreign currency exchanges where the players can exchange their winnings made in crypto for other cryptocurrencies or fiat money. Some players use crypto only, and they won’t have a need for this service.
The exchanges are more heavily regulated than the casinos, and players won’t be able to use them without providing their real names. There are fees paid for using them and taxes on the income made from trading in different currencies, if any.
How are Crypto Winnings Taxed?
The winnings made from sports betting are taxed in all the countries that allow the use of cryptos in the first place. They are taxed at the same rate as income, with the same tax deductions that apply to income. The winners are obligated to report the income made in crypto in this fashion, and there are penalties for those who don’t.
It’s important to note that the winnings made this way are taxed based on how much the cryptocurrency is worth when the winner receives it. Due to how volatile cryptos can be, it may be good or bad.
Future Legal Trends
The world of cryptocurrencies is rapidly changing. It’s becoming more common and widely accepted, and many traditional financial institutions now accept crypto payments. This will also change how sports betting sites that accept crypto are treated.
More Regulations
As there are more crypto users than before and traditional financial institutions are getting into crypto as well, there will probably be more regulations. These will cover the use of crypto and the ability to connect it with traditional financial products. At the same time, the gambling industry will also be more regulated as more players are trying their luck. It may lead to a safer and more predictable environment, even though it takes some of the libertarian aspects of using crypto that were a big draw at first.
Harmonizing Laws and Regulations
Since cryptocurrencies are available worldwide, and so are the sports betting sites, there will be a move to harmonize the regulations. There’s already global collaboration in this regard since all the world’s governments are dealing with the same innovations and problems.
Europe, or more specifically, the EU, will lead the way when it comes to harmonizing regulations, as that’s what they are the best at, and others will follow.
Conclusion
Cryptocurrencies have been widely used in sports betting for a couple of years now. The regulations are a bit behind the practice itself, as is always the case, but they are catching on now when there are more users and the amounts transferred have increased.
There are regulations about sports betting and the use of crypto itself, but there are also regulations about how crypto can be exchanged and how the winnings are taxed. These will become somewhat stricter in the years to come as more traditional financial institutions are involved. It will make the whole process somewhat safer, but also less exciting.
