Does the US allow you to gamble with Bitcoin legally? The law is still unclear about this.
If you are some of the few and far between people who are not aware of what Bitcoin is, you must not be here, reading the article.
Jokes apart, Bitcoin in modern times is the famous talk of every town. More and more people are using it as a currency in online casinos with every passing day. However, we cannot give on the reason behind the uprise of the famous cryptocurrency among gamblers.
Is It Illegitimate to Use Bitcoin for Gambling in the US?
It is a difficult question as gambling using different US currencies is mired in various legal areas under multiple federal laws and state laws. Nonetheless, I am confident enough about the fact that no national law band gambling with Bitcoin.
There are some reasons to ban online sports betting, like the Wire Act. Due to the Unlawful Internet Gambling Enforcement Act (UIGEA), it is illegal to send money and facilitate any transfers with the intent of gambling illegally. If the gamblers use Bitcoin for such purposes, they go against their rules. Note that this never means that Bitcoin gambling is illegal in the whole US.
Undoubtedly, the popular coin is based on Blockchain. The fact that every gambler should be aware of is that it is the slowest database technology that ever came out.
Any of you can go for an SQL query on this blog that will complete within nanoseconds. Conversely, if you go for a Bitcoin transaction, it will take around twelve hours to complete.
Nevertheless, Bitcoin is a solution for issues people face while sending money around the globe. Undoubtedly, the bank transfers might take days to complete such transactions.
Hence, in comparison to them, Bitcoin transactions are rapid.
If you are worried about the bank account, you can create your Bitcoin wallet and send and receive Bitcoins to and from any corner of the world. To withdraw any cryptocurrency, you will have to have access to the banking system.
Bitcoin Is Not Exactly Legitimate Tender in the US
A very crucial point is for the Bitcoin businessmen. Although a US court has declared Bitcoin as money, a general perception among the legal professionals is that it is still not legitimate in the US.
One example is that taxes are not payable via Bitcoin.
It does not mean that the government is unwilling to tax your gains in Bitcoin, but rather the opposite. On the one hand, they won’t permit you to pay taxes in pork bellies, and on the other hand, they will demand a share of your gains from the pork belly trades.
So, Bitcoin is an electronic asset that you can trade on multiple exchanges. The buying and selling of Bitcoin continue all day long.
Sadly, the Securities and Exchange Commission (the S.E.C.) of the US has rejected numerous proposals to establish Bitcoin Exchange Traded Funds (ETFs).
ETF’s are famous with stock investors as they follow the market indexes and typically return considerable profits even in economic crisis’s. Additionally, they have low fees as ETFs are run wholly by computers with the least human supervision.
Currently, the Bitcoin owners can buy and sell Bitcoins on different exchanges and can also store them in their wallets, but at the same time, they cannot use the cryptocurrency as a legitimate tender in the US. However, if any businessman accepts your Bitcoin payments, well and good, they cannot deposit the coins in their banks.
American Gambling Laws Are Written While Keeping Legitimate Tender in Mind
The gambling laws were decided long ago, even before digital currencies became popular in the financial market. However, the word of law never actually took the potential of Bitcoin and other currencies into consideration.
So the oversight clarifies that no American citizen will be summoned for using Bitcoin for online gambling. Factually, Bitcoin is not a legitimate tender for the US lawmakers and is more like play money.
Do not convert your savings into Bitcoin for now. Some other electronic assets are continually bringing the hammer down in some courts.
For instance, people consider purchasing loot boxes in video games as gambling. The boxes contain random gifts, and the players are not aware of what is there in the box. Both the United States and European courts decided that no video games will sell these loot boxes.
Now should we treat Bitcoins the way they treat loot boxes?
Gamblers would not like it if this happens as they want to continue gambling.
Currently, the only difference between purchasing loot boxes in video games and using Bitcoin for gambling is that you do not directly buy the crypto coin from the online gambling sites. The sites expect you to deposit your Bitcoins to your casino player accounts. Therefore, you purchase the Bitcoin somewhere else, and they have no interest in that.
Also, you do not have to pay for Bitcoin. You might receive Bitcoin from anyone for various reasons, like running your Bitcoin mining server (Though it is challenging to earn cash through Bitcoin mining).
Online Gambling Laws Are Enforced against the Gambling Sites, Not the Gamblers
Until now, some American players have been sued and fined for online gambling. So, if you plan to set up your casino, then it is impossible to do so as you will not function as an American web hosting firm.
You have to contact your software and resources from a firm that can provide the services legally. Moreover, you need to get a license from a running game company that you will not find in the US.
However, some states do regulate online gambling for their residents. For instance, you want to use an online casino in New Jersey; then you must be physically located inside New Jersey whenever you gamble online for cash.
Even if you make an account with a licensed New Jersey gambling site and deposit money into that player account, you will not be able to play for cash while you are not physically in New Jersey.
Therefore, while you are not likely to be arrested for gambling online, you might find it difficult to gamble online. If you live in the US and try to join any casino like the Bodog or Slots.Com, you will be respectfully turned away. , they do not accept US players. So, as the online casinos avoid the US players, they become free from any worries regarding the US’s enforcement actions.
So Who Are These People Operating US-Friendly Online Gambling Sites?
The online casinos that cater to US players fall into two different categories:
- The licensed gambling operations create sites abiding by the strict rules of licensing of the US. So, if you live in a place that allows online gambling, you will find a minimum of two online casinos that follow the state laws. The sites are regulated by top-notch corporations that are held accountable to state laws.
- The next category is of the online casinos that function in grey areas. We are somewhat aware of these people, but they try to keep hiding their identities. In simple words, they set up their organizations in foreign countries (not necessarily US citizens), and they function following the laws of the countries they operate.
All the Bitcoin casinos that operate out of the US jurisdiction, and if the American law enforcement can shut them down, rely heavily upon what the casinos do and how committed US authorities are to get them. In some cases, aggressive law enforcement actions have been taken against the companies that operate overseas.
For instance, one group functioning out of Costa Rica advised its gambling clients to purchase debit cards from online retailers and then use them for deposits. It was seen as money laundering, and things did not turn out well for all the people.
You Might Hate Bitcoin, but We Are All Stuck with It
Over the years, Bitcoins have had problems. Numerous major exchanges failed over time, costing Bitcoin owners hundreds of millions of dollars into losses. Also, a theory revolves around the internet that the Bitcoin prices, to some extent, are influenced by the whales, which supposedly have so many Bitcoins that they can change the prices according to them.
Only a few companies support the Bitcoin mining process as they are expensive. Through mining, new transactions are encoded to the publicly distributed blockchain tech. Also, people do not consider the Bitcoin transactions valid until 50%+1 of the miners agree on the hashing values. The more blocks are added to the chain, the more time the process will take.
Numerous proposals tried to fix Bitcoins technology that failed or began creating new cryptos. At times, they began generating competitive wealth for Bitcoin individuals when the new blockchains were forked off for creating new cryptocurrencies. The politics of the Bitcoin mining community adds to the Bitcoin price volatility and instability.
Despite that, as the gambling websites that enable the US gamblers are trying their best to avoid breaking any US laws, they will probably keep relying on Bitcoin as an exchange medium. Remember that your Bitcoin value will keep varying like other currencies (Euro, Yen, and Dollar), but you will not earn or lose anything until you trade outside Bitcoin.
Gambling with Bitcoin is all about losing some or all Bitcoins while gambling. Note that you pay for fun while you play.
So, you have willingly signed up for this risk.
Bottom Line
Let us get back to the actual question: is it legitimate to gamble with Bitcoin in the US?
So, it is not categorized as illegal, yet that is something.
Being a player, you must remain free from worries like someone will imprison you in case of violating laws.
However, if you win from gambling, you will have to report your winnings and pay taxes on the Bitcoin winnings.
Yes, the unavoidable risk here is that you shall be prosecuted if you do not pay the taxes.
