Gambling Using Digital Currency
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UPDATED: Dec 13, 2018
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Gambling online using digital currency is an increasingly popular trend on online platforms (which keep popping up) that accept Bitcoin as payment. Casinos with a physical presence or location predominately still prefer the more-traditional payment methods (though some accept Bitcoin to pay for meals, rooms, or drinks). That said, using virtual currency for gambling is revolutionizing gaming, but without the regulatory controls. It is just another payment option– one you should use only if you are willing to accept the additional risk that come from its use.
In order to place a bet or gamble, you need what’s called “consideration” or something of value. The established digital currencies, like Bitcoin, have value: you can, at a crytocurrency exchange or in a private transaction, exchange U.S. dollars or other legal tender for Bitcoins and vice versa. Having value, they can serve as consideration for gambling.
However, there is no inherent right to gamble. It may be legal in most states, but it’s only legal because the states choose to make it legal. There is no Constitutional Amendment or fundamental legal principal stating that you have the right to gamble, which, in turn, means that gambling providers don’t have to offer you the opportunity to gamble–they do so under whatever terms they choose. That means that because it is purely voluntary for casinos (or card rooms, or bingo halls, or racetracks/racinos, etc.) to offer gambling, they can freely decide what they will accept as “consideration”. They can refuse personal checks, for example, since those are easily dishonored; they could, if they chose, refuse credit cards, if they want to avoid processing fees, and insist on cash only; and they could refuse to accept digital currency. They might refuse the latter because:
(1) they don’t understand it and are uncomfortable with it; or
(2) they don’t like the price volatility that has been associated with the major digital currencies; or
(3) they don’t like the association that some digital currencies have with illegal transactions or money laundering. (For reasons relating to how they are regulated, legitimate gambling operators tend to steer widely clear of anything even hinting at illegality.)
Whatever the reason, a gambling provider is free to refuse digital currency. You have no leeway to force them to accept it (or to pay out your winnings in digital currency).
Providers willing to use digital currency
For obvious reasons, most online casinos or gaming providers are already operating in, and comfortable with, the digital world, and are much more likely to have the technological expertise and infrastructure that would facilitate accepting digital currency.
Be sure you only gamble with a licensed, regulated online gambling provider (read our article on “Searching for a Legitimate and Reputable Online Gambling Site”) since if you gamble with an unlicensed or unregulated site, you have essentially no consumer protection. If the unlicensed operator fails or refuses to pay you, or simply closes “shop” and disappears, you are not likely to get your money. That is one of the risks associated with digital currency use. Since you are operating in the virtual world and are dealing with more cutting-edge digital issues, it is easier to end up betting with an unlicensed, illegal, or simply fly-by-night outfit. Our best advice: do some “due diligence” –consult reviews and feedback about Bitcoin gambling websites you are interested in—before you jump.
Volatility issues with digital currency
You bet with Bitcoins (or other cryptocurrency) on the online casino platform; your winnings are in Bitcoins. At some point, you’ll have to convert those winnings into cash.
Bitcoins operate like any other currency. Its price rises and falls depending on the market. This volatility adds its own layer of risks (a must read is a 2018 Forbes article on Bitcoin volatility). When you gamble, you take the risk of losing–that’s why it’s called “gambling” and not “a sure thing.” But when betting with the more volatile forms of digital currency, you “double down” on the risk: if you win, depending on when you convert your winnings into dollars and coins, it could fetch less –or it could possibly be more–than you thought it would be, based on whether the currency value is up or down.
So, to sum up: if you find a legitimate gambling operator who is willing to accept digital currency bets, you can gamble using it. Whether you should gamble using digital currency is your call.