Similar to how you can spend physical cash at a local casino, you can gamble with cryptocurrency at any online casino that accepts Bitcoin. The process of gambling with crypto is exactly the same as that of gambling with dollars, pounds, or any other kind of fiat currencies: you place your wager, and you either win or lose. Moreover, the idea is not new.
SatoshiDice became one of the very first Bitcoin gambling platforms to go live as early as 2012 – where hundreds of thousands of Bitcoins were wagered away (back when they were worth very little!). Even after a period of ten years, bitcoin gaming is still quite popular.
These days, the use of cryptocurrency in gambling has become a huge industry. There are countless mobile bitcoin casinos for you to choose from, in addition to other crypto casinos that embrace common altcoins, such as ETH, XRP, DOGE, and more. Players must exercise great caution in this market since it is full of frauds, ranging from phishing schemes that ask for personal information to sketchy cryptocurrency gambling sites that refuse to allow you to withdraw your winnings.
Pros and Cons of Crypto Gambling
Besides the evident hazards and possible benefits of any form of gambling, there are specific factors to consider when gambling with Bitcoin. The following are some benefits and drawbacks of cryptocurrency gaming.
Benefits of Cryptocurrency Betting
Elevated security and anonymity standards: Since personal information is not necessary for transactions, using cryptocurrencies like Bitcoin guarantees improved security and privacy for gamblers while lowering the danger of data breaches.
Availability of incentives and promotions: Due to the rising popularity of bitcoin gambling, a lot of cryptocurrency gambling sites lure players with enticing bonuses and promotions, including cashback on deposits and free spins.
Simple registration process: The majority of cryptocurrency gaming sites streamline the registration process by enabling players to join without disclosing personal information, in contrast to traditional online casinos.
Drawbacks of Crypto Betting
Volatility: The potential for large swings in a cryptocurrency’s value over short periods of time means that the amount deposited may be worth more or less than planned.
Absence of legislation: Since cryptocurrencies are not subject to financial or governmental oversight, this might lead to questions about how money is handled responsibly at cryptocurrency-based gaming platforms.
Exorbitant transaction fees: The cost of utilizing cryptocurrencies can vary greatly, and in certain cases, it can even be more than the initial investment, which can negatively affect the entire gambling experience.
Is Crypto Gambling Legal and Taxable?
The constitutionality surrounding using cryptocurrency for gambling varies greatly based on the country of residence and the rules that apply to it specifically. Generally speaking, the UK, Australia, Canada, and other EU countries are among the countries that are more permissive of online gambling.
The US takes a diverse attitude toward internet gambling, with states taking differing positions and some being more permissive than others. This is especially true when it comes to betting on sporting events. States in which online gambling games such as slots, online poker, or both are permitted include Connecticut, Delaware, Michigan, Nevada, New Jersey, Pennsylvania, and West Virginia.
A number of nations, including the UAE, China, and Indonesia, have banned internet gambling completely, including gambling using digital currencies. To guarantee legal compliance, it is essential for players to understand and comprehend the laws controlling the usage of cryptocurrency and online gambling in their local jurisdictions.
Going further, there is always a chance that your bets will be profitable when you participate in crypto gambling. So, how will taxes be applied to your winnings? Since industry regulations are constantly changing, we have yet to receive clear instructions on the taxation of cryptocurrency gaming wins in significant countries. Since there isn’t a worldwide standard in place at the moment, depending on where you reside, you could have to pay more in taxes or deal with restraints when you opt to exchange your winnings from gambling in the not-too-distant future.
To focus on the US for the time being, citizens’ cryptocurrency earnings are liable to both federal and state income taxes. However, real wins are tax-free in Canada and the UK. However, using cryptocurrency for bets or gaming might be seen in all three nations as the purchase of goods or services, making it liable to capital gains tax; but, as there is no certainty of success, you could theoretically write off these transactions.
It’s also a different matter when it pertains to trading and selling crypto proceeds due to capital gains tax, which is accompanied by an additional layer of complexity. The difference in value between the time you bought your item and the time it was sold is subject to capital gains tax. If that value reaches a specific threshold, you will be obliged to pay a tax percentage based on its cost basis. However, it might be claimed that profits from cryptocurrency gambling have no cost basis, which could mean that the whole amount of your pot could be liable to capital gains tax.