Are Crypto Casinos Illegal in the US?
By
Jane Shaw
Senior Editor Updated: 10/25/2023
We count on Jane to inform our readers about the latest slot games in the US market. With her passion for video games and a degree in engineering, she’s our gambling tech expert. Jane’s also active in our blog section, where she tackles the curiosities and changes in the industry.
Crypto Casinos
- Illegal Crypto Gambling
- Bitcoin Casino US Sites: Are They Legal?
- States Where Crypto Casinos Are Legal
- States Where Crypto Gambling Is Illegal
- Risks of Crypto Casinos
- US Regulatory Challenges
- Frequently Asked Questions
By now, almost everyone has heard about crypto casinos; and if you’re wondering about what they are or find yourself asking: is Bitcoin gambling legal? – then you’re in the right place. Today we’re going to look at the complex world of crypto online casinos in the USA – and what you need to know if you’re thinking of playing at a crypto site from the US.
Illegal Crypto Gambling
Illegal crypto gambling; it’s the latest negative trend to hit the online gambling industry, with many illegal unlicensed casinos using crypto as a way of circumventing traditional payment provider blocks. But what about the licensed online casinos accepting crypto? Can Bitcoin casino US sites operate? Well, crypto casinos operate in a gray area of the law a lot of the time.
While cryptocurrencies are legal in the US, using them for online gambling is where things get complicated. Federal and state laws are not clear-cut when it comes to crypto gambling, making it a risky venture for both operators and players. We’ll cover the basics in today’s post. In the meantime, if you want to play at legal online casinos, make sure you check out our recommended sites.
Bitcoin Casino US Sites: Are They Legal?
While cryptocurrencies like Bitcoin and Ethereum are legal, using them to play at online casinos is where things can get confusing. The main reason behind this confusion is the lack of clear regulations governing the use of cryptocurrencies for gambling activities.
While the U.S has both federal and state laws around gambling, they mostly talk about land-based casinos and lotteries. As crypto is still new, regulators are in a race to try and catch up.
In terms of specific laws: the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”
However, the act doesn’t specifically mention cryptocurrencies, which is where a lot of the confusion stems from. States have their own sets of laws, and some are more lenient than others. However, even in states where online gambling is legal, most sites choose to steer clear of accepting cryptocurrencies like Bitcoin and Ethereum. Most US crypto casinos are located offshore.
States Where Crypto Casinos Are Legal
As we just mentioned, some states, like New Jersey and Pennsylvania, have legalized online gambling and have clear regulations in place. These states issue licenses to online operators, much in the same way the United Kingdom Gambling Commission (UKGC) and the Malta Gaming Authority (MGA) do.
At the time of writing, there are just six states that allow legal online casinos. These states are New Jersey, Pennsylvania, West Virginia, Michigan, Delaware, and Connecticut. Rhode Island will be legalizing it soon. Now, if online gambling is legal in these states, it’s safe to assume that crypto online gambling is also allowed unless specifically mentioned otherwise – but the lack of any clear guidance means it’s often left up to operators to interpret it, and most are unwilling to risk huge fines or prison time.
For players, this means you can either play at licensed casinos in the US – without crypto – or head to an illegal crypto gambling site based overseas and play with cryptos like Bitcoin. This is where doing your own due diligence comes into play – and shows you why it’s so important.
States Where Crypto Gambling Is Illegal
Unfortunately, while online sports betting has seen tremendous progress regarding legalization, online casinos are lagging behind. There are numerous reasons for this; some states have moral or religious objections to gambling while others are concerned about social issues like gambling addiction. There are also states that have not modernized their gambling laws to even recognize the fact that online casinos exist!
States like Utah and Hawaii have strict laws against all forms of gambling, online or otherwise. In these states, you won’t find any legal casinos, online or land-based. However, it’s not usually illegal for you, as a player, to play at an offshore casino; the law stipulates that operators must not accept US players. However, you should always do your own research to ensure you don’t fall foul of your local or federal laws.
No state, at the time of writing, has specifically made crypto casinos illegal – so this isn’t something you need to worry about. You’ll also find casinos accepting a variety of other payment methods. For example, there are more online casinos accepting PayNearMe than ever – and you’ll find all the top sites recommended here on our website.
Risks of Crypto Casinos
While Bitcoin betting has, for many, made playing easier than ever, you should be aware that crypto gambling does have its risks – ones you often won’t need to think about at conventional online casinos.
Firstly, and arguably most importantly, there’s the lack of regulation. Since most crypto casinos operate from outside the US, they are not subject to the same regulatory standards as those licensed by state regulators. This means there’s no guarantee of fair play, and you have limited options for legal recourse in case things go wrong.
Another risk is the potential for fraud and scams. The anonymity provided by crypto transactions makes it easier for fraudulent platforms to operate – and once you send funds to your wallet, there’s no way of getting them back. So, if you unwittingly play at a rogue operation, there is no legal recourse through a banking regulator to get your money back.
Finally, there’s the volatile nature of cryptocurrencies. The value of cryptocurrencies can fluctuate dramatically in a matter of hours – even minutes – and, if you’re not careful, or aren’t prepared, this can lead you to lose a big chunk of your money! Of course, it can go the other way too – but it’s something to be aware of.
If crypto really isn’t your thing, then make sure to check out casinos that accept PayPal or the other recommended sites we’ve reviewed, as they’re all licensed, hand-picked, and reputable, making them great places to play.
US Regulatory Challenges
Regulating crypto casinos is a huge undertaking many non-US licensing bodies are struggling to come to terms with. In the US, this is further complicated by the fact that there’s both federal and state law. From a regulatory point of view, the decentralized nature of cryptocurrencies makes it difficult to track transactions and enforce anti money-laundering and anti-terror-financing laws.
Another major issue regulators face is that current legal frameworks were often written before cryptocurrency was even a thing. That poses a problem, given the fact, some of the best paying online casinos take crypto. This has led to a kind of “regulatory vacuum” where crypto casinos operate in a gray area, not illegal – but not legal on paper, either.
Enforcement is another major problem. Even if laws were in place, the anonymous nature of crypto transactions makes it difficult to enforce laws effectively. Regulatory bodies would need to use advanced tracking and surveillance software, like that used by the IRS to audit companies – and this can cost millions of dollars.
