Crypto Casinos & Payments in Online Gambling

A guide to crypto casinos and payments in online gambling

Crypto  Casinos  & Gambling

Introduction

The crypto gambling market has grown rapidly, however it proves very difficult to try to value the size of the market given the lack of market transparency. Total online gambling revenue is estimated to be close to $100bn and appears to be growing with a CAGR of around 10-12%. It is estimated that crypto related gambling is anywhere between 10-20% of this total). The most popular virtual assets used for payment are BTC, ETH and USDT. Crypto supporting platforms often offer a wider array of games, including slots, poker, and sports betting. 

Top nations embracing crypto

Crypto gambling includes traditional online gambling (where it is just used as a means of payment) and gambling involving Web 3.0 technologies that use blockchain technology for peer to peer betting on a decentralised basis and within games, for example, to ensure fairness through transparent mechanisms like “provably fair” systems. 

Overall, the crypto gambling market is driven by tech-savvy entrepreneurs that build products that appeal to privacy-conscious individuals seeking fast payments across borders. It continues to expand with innovations like decentralised gambling platforms and the use of NFTs. The popularity of crypto related gambling is expected to be strongly correlated to the interest in crypto assets and alternative cross-border payment methods by people in different parts of the world. It must also be noted that crypto enthusiasts are considered to have a large proportion of what are termed degens, meaning degenerate gamblers, and this makes them an attractive target to operators.

Despite the growth in crypto gambling, regulatory challenges exist. Crypto gambling faces varying degrees of restriction across different jurisdictions. Most of the market is operating in regions with more relaxed regulations on crypto and gambling, such and focused on parts of Asia and some European countries. This contrasts with traditional online gambling, which is usually subject to more established and stricter local regulations in major jurisdictions.

Some of the largest providers include: BC.Game, betpanda, Cloudbet, Stake.com and FortuneJack. There are also a number of large platform providers and aggregators, such as Soft Swiss that offer turnkey solutions for crypto casino operators and whose revenue is estimated to be over $500m per year. Many casinos will also use traditional means to avoid certain online gambling regulation (e.g. prize promotions/sweepstakes which rely on a free entry route to avoid regulation whether using tokens or some in-app ‘gold’ coins).

The use of crypto for online gambling is popular due to several factors:

  • Privacy: Many users value the perceived discretion provided by cryptocurrencies.
  • Faster transactions: Crypto payments tend to be quicker than traditional banking methods, particularly for withdrawals.
  • Lower fees: Cryptocurrency transactions can reduce the cost for both operators and players, compared to credit card fees or bank transfers.
  • Global access: Crypto allows for easy cross-border payments, which can be appealing in markets with regulatory restrictions on gambling or cross-border payment limitations.
  • Gambling Frequency and Value: In jurisdictions which are perceived as lighter touch from a regulatory perspective, less strict problem gambling / responsible gambling rules may be in place therefore not limiting the frequency and amount of gambling by customers as in more regulated jurisdictions.

Data suggests that the United States, Japan, South Korea, Germany, and Canada are among the top markets for crypto usage in general, which includes crypto gambling. 

The geographical landscape for crypto gambling shows varied adoption rates:

  • Europe: Currently leads the online gambling market, with countries like Germany and Italy generating significant revenue. However, only about 12% of European gamblers own cryptocurrencies.
  • Asia-Pacific (APAC): This region is witnessing rapid growth in crypto adoption alongside online sports betting, particularly in countries like India, Malaysia, Vietnam, Singapore, South Korea, and Indonesia, where ownership exceeds 20% among gamblers.
  • North America: The U.S. has a complex regulatory environment with varying state laws regarding online gambling. However, it remains a significant player in both casino games and sports betting including using crypto for payment.

South Korea, in particular, has a very active market for crypto transactions and is a significant player in the global crypto scene, while Japan and the United States lead in overall crypto innovation and adoption. Canada has also become a hotspot for crypto gambling, as it leads in user penetration rates for crypto use in online gambling, largely due to favourable conditions for both users and operators.

Crypto gambling has also become particularly prominent in regions where local currencies are unstable or where traditional payment methods are restricted due to gambling regulations or capital controls.

Further reading:

https://en.cryptonomist.ch/2024/09/14/global-crypto-leaders-top-countries-driving-cryptocurrency-usage-2024/ https://techreport.com/statistics/crypto-gambling-market-statistics/ 

Traditional Online Gambling Jurisdictions

Many major jurisdictions in the regulated online gambling sector (e.g. those operating from Gibraltar, the UK and Malta) have been relatively slow to permit crypto payments or blockchain gambling. Malta released guidance in 2023 on the use of virtual assets for online gambling which suggests a more constructive approach is now being taken, whereas Gibraltar reviews each proposed use on a case by case basis and the UK is particularly cautious. In addition, we have not seen a jurisdiction really grapple with the impact of Web 3.0 technologies on operator requirements and technical standards, which presents an opportunity.

The caution is primarily due to concerns about the ability to apply existing licence conditions and regulatory requirements to crypto payments and web 3.0 infrastructure, AML/CTF concerns and a desire not to upset the applecart in respect of their existing traditional operator market. 

In addition, in some jurisdictions the regulators remain sceptical or cautious about the use of cryptocurrency and are wary of the risk that it would increase cross-border scrutiny and political opposition to their existing market position and operators. Traditional major online gambling hubs are concerned about enabling higher risk activities that could give rise to AML/CTF concerns and even potentially a heightened risk of FATF greylisting for the jurisdiction as a whole.

Cross-Border Licensing

It is important to note that many licensed operators maintain multiple licences around the world since there are jurisdictions that licence operators based on where games are advertised and offered and not on the country of establishment of the operator (e.g. Great Britain). This is also the case for crypto gambling operators.

Curaçao

Curaçao is a Caribbean Antilles island near Venezuela and is part of the Kingdom of the Netherlands. It is currently the largest hub for crypto gambling operators. This was largely due to Curaçao’s lenient regulations and the ease of obtaining a gambling sub-licence by partnering with a master licence holder. However this regime is rapidly changing with new gambling requirements coming into force limiting and controlling the use of sub-licensees. 

Why Curaçao is a Major Hub

  • Favourable Licensing Environment: Curaçao offers cost-effective, all-inclusive gambling licences, which cover various types of gaming activities, including online casinos and sports betting. The process is relatively fast and simple compared to other jurisdictions, making it an attractive option for operators.
  • Regulation of Crypto Gambling: Unlike stricter regions, Curaçao has traditionally been more accommodating toward cryptocurrencies, which has made it a go-to destination for crypto gambling platforms. The island’s licensing regime allows operators to accept and make payments in crypto. It has traditionally been considered a light touch for AML/CTF compliance (see below).
  • Tax Benefits: Curaçao also offers tax advantages, such as an effective rate of 2% corporation tax on net profits for international business companies and no VAT. This makes it even more attractive to operators who want to keep their costs low while maintaining the legitimacy of having a licence.

Comparison to Other Jurisdictions

  • In contrast to stricter jurisdictions like the U.S., where crypto gambling faces significant legal barriers, or European countries like the UK, where operators must navigate complex regulatory environments, Curaçao’s framework is much more flexible, enabling faster entry into the market for crypto gambling businesses. However, it must be noted that Curaçao has also been forced to undertake a major overhaul of its AML/CTF framework due to international pressure and concern about FATF grey-listing following the 2023 National Risk Assessment.
  • Tobique: We have also recently seen newer entrants like Tobique (First Nation, New Brunswick, Canada) enter the market and offer a regulatory environment by way of self-governing regulatory body (Tobique Gaming Commission) that supports crypto gambling subject to compliance with the various anti-money laundering and consumer protection requirements.

 

Crypto gambling involves significant risks:

  • Regulatory uncertainty/consumer risk: One of the primary risks is the lack of clear regulation, with many countries not having legal frameworks for crypto related gambling. This can lead to unlicensed operators and grey market activity for consumers based in countries with ostensibly strong regulations for online gambling and make it harder for consumers to obtain redress when they are harmed by unfair practices or fraud.
  • Money Laundering: A major concern for regulators is money laundering. Whilst the risk and impact of money laundering in online gambling is generally perceived to be relatively low compared to many other activities, the addition of cryptocurrencies to the mix means that crypto gambling platforms are perceived as more susceptible to misuse, raising issues with AML/KYC compliance (unless additional checks are in place).
  • Taxation: Taxation and reporting for tax owing on crypto related activities is often unclear or complex in many countries, creating potential issues for both operators and players in reporting and paying taxes. Some regions are also increasingly targeting crypto gambling platforms with regulatory crackdowns, resulting in potential bans or restricted operations.
  • Access to traditional payment services/ FATF Grey List concerns: Additionally, crypto gambling platforms face difficulties accessing traditional banking services, as financial institutions are wary of higher-risk activities. The use of stablecoins and privacy coins may also invite scrutiny, especially regarding sanctions and anti-money laundering regulations. This can make larger online gambling hubs and operators more cautious about supporting adoption.
  • Technological risks: Platform security and smart contract vulnerabilities, can lead to hacking and exploitation, prompting regulatory oversight on cybersecurity measures. Crypto gambling operators must implement robust compliance strategies to mitigate these risks and seek licensing in crypto-friendly jurisdictions to maintain operations.

The Markets in Crypto-Assets Regulation (MiCAR), adopted by the European Union in 2023 and set to come into full effect by the end of 2024, primarily aims to regulate the cryptocurrency industry, providing a unified framework for crypto assets, stablecoins, and crypto service providers across the EU (actually the EEA). Its interaction with online crypto gambling is indirect. 

MiCAR is not designed specifically to regulate crypto gambling, but its impact will be felt indirectly through its regulation of crypto-assets, stablecoins, and service providers. It could help the market by providing greater legal certainty and consumer protection, which may encourage broader acceptance of crypto in gambling. However, it could also hinder the market by imposing higher compliance costs and operational burdens, particularly for smaller platforms or those operating in less-regulated environments. Gambling itself remains outside of MiCAR, and each EU member state will continue to regulate online gambling independently.

MiCAR’s Core Objectives

MiCAR focuses on regulating crypto-assets that are not currently covered by existing financial regulation (like MiFID II) and aims to: ensure consumer protection and market integrity; address anti-money laundering (AML) risks; regulate stablecoins, which are commonly used for transactions in crypto gambling; regulate the offer of tokens including token sales and  provide clarity on the regulatory environment for crypto service providers operating across EU member states by harmonising regulatory permissions and passporting rights.

Gambling and MiCAR: Is Gambling Regulated By MiCAR?

While MiCAR is a comprehensive regulation, gambling activities themselves are not specifically targeted by MiCAR. The regulation is focused on crypto-assets and service providers related to trading, issuance, and custody of cryptocurrencies. Online gambling, including crypto gambling, remains governed by national gambling laws within the EU.

Gambling in the EU is largely a national competence, meaning each EU member state regulates gambling according to its own rules, even with the implementation of MiCAR. Thus, MiCAR does not directly regulate gambling activities or operators. Crypto gambling platforms may still be impacted due to how MiCAR applies to crypto-assets and payment services.

  • Since gambling regulations remain a national matter, individual EU member states retain the authority to regulate or ban online gambling as they see fit. For example:
    • Some countries have strict regulations or bans on online gambling (e.g., Poland, Germany), while others have more crypto-friendly frameworks (e.g., Malta, Estonia).
    • In member states where crypto gambling is already regulated (like Malta), MiCAR may enhance legal certainty for platforms, especially concerning stablecoin usage and crypto payments.

Indirect Impact of MiCAR on Crypto Gambling

One of the key areas where MiCAR will affect the crypto gambling market is the regulation of stablecoins, which are widely used in online gambling to avoid cryptocurrency volatility. MiCAR imposes stringent requirements on issuers of stablecoins, including: capital and reserve requirements for stablecoin issuers, regular audits and transparency obligations, limitations on non-euro-denominated stablecoins for payment services in the EU.

These rules could have both positive and negative impacts:

  • Positive: 
    • If well-regulated, stablecoins will become safer and more reliable, leading to broader acceptance in the gambling industry. 
    • Consumers will have more confidence in using stablecoins on gambling platforms, knowing that issuers are regulated and the risk of default or failure is minimised.
    • Gambling regulators are more likely to approve the use of stablecoins and other crypto assets that are accepted under MiCAR.
  • Negative: The increased regulatory burden may reduce the number of stablecoin issuers, limiting options for gambling operators, or increase operational costs for crypto payment services, which could deter smaller platforms from adopting crypto payments.

Web 3.0 is the next evolution of the internet, promising a more decentralised, user-centric, and intelligent web experience, largely driven by advancements in artificial intelligence (AI), machine learning (ML), and blockchain technology.

Decentralisation 

One of the core principles of Web 3.0 is decentralisation. Unlike Web 2.0, where large companies control vast amounts of user data, Web 3.0 aims to give control back to the users. Blockchain technology better enables peer-to-peer networks and decentralised data storage, allowing for the secure and transparent transfer of data and assets without the need for intermediaries like Google, Facebook or large banks. This can manifest through decentralised applications (dApps), which run on blockchain networks like Ethereum, rather than centralised servers.

Metaverse

The metaverse is a virtual, interconnected space where people can interact, socialise, and trade. Web 3.0 enables true digital ownership through NFTs. Users can own virtual land, avatars, art and assets that are verifiably theirs, independent of any platform provider. This allows for greater interoperability across different virtual worlds, as these assets can be transferred or used in multiple metaverse environments. DeFi further supports a new economic model for the metaverse, where users can trade, invest, and monetise their assets without relying on centralised financial institutions. Web 3.0 is the backbone that makes the metaverse scalable, secure, and user-centric, driving innovation and empowering individuals within virtual spaces.

DAOs

One significant development that has sought to unlock the benefits of blockchain is the use of Decentralised Autonomous Organisations. These enable communities of people that hold the relevant governance tokens to vote on the development tasks, budget allocation and other key issues in relation to the community dApp. In some cases this can make it challenging to apply traditional regulatory frameworks (securities law, collective investment scheme rules, online gambling requirements)  to these platforms and products since there may be no central controller or manager of the products.  

Semantic Web / AI

Another key feature of Web 3.0 is the use of the semantic web, where websites and applications can understand and interpret data in a way that resembles human understanding. By integrating AI and machine learning, Web 3.0 can create more personalised and adaptive experiences..

Personalisation and Control 

Web 3.0 enables users to have greater control over their personal data. Blockchain allows for the creation of self-sovereign identities where users control who accesses their data, as opposed to the current model where companies own user data. Cryptocurrencies and DeFi are a good example of this shift, allowing users to conduct financial transactions without intermediaries and securely store their wealth on blockchain wallets.

Interoperability 

Web 3.0 emphasises cross-platform integration, where services and applications can work together seamlessly across different platforms. For instance, a user could log into various services using a single blockchain-based identity or move digital assets (like NFTs or tokens) between different dApps and platforms.

Web 3.0 Examples

  • DeFi Platforms: like Aave or Uniswap allow users to lend, borrow, and trade digital assets without relying on traditional banks or brokers. 
  • Publishing Platforms: Projects like Steemit or Mirror.xyz allow users to publish content while maintaining ownership over their data, and they can be rewarded in cryptocurrencies. 
  • Gaming and Asset Ownership: Blockchain-based environments like Decentraland and Axie Infinity let players truly own in-game assets (such as land or characters), which can be bought, sold, or traded on decentralised markets.
  • Gambling: Decentralised sports betting exchanges like dexsport.io and casinos like BC.Game which state that they use provably fair games and provide a validation tool.

Further reading:

https://coincodex.com/article/41035/provably-fair-crypto-casinos/

Web 3.0 technologies, particularly blockchain, offer numerous advantages for both regulators and customers in the online gambling industry. These benefits stem from increased transparency, security, and user control, which can foster a more trustworthy and efficient gambling environment. As always, these benefits also come with risks that need to be sensitively handled, not least because blockchain is so reliant on trust in the quality of the code that is being used and that can be verified. 

The choice of blockchain and blockchain protocols (rules and algorithms that define how the network operates) by operators is crucial.

Advantages to Players of Decentralised P2P Betting and Provably Fair Games

  • Transparency and Trustworthiness: 
    • Provably Fair Games: Traditional online casinos often use Random Number Generators (RNGs) to determine game outcomes, but players have to trust that these RNGs are fair and not manipulated. In contrast, provably fair games, like those offered by Stake.com, enable players to verify the fairness of each outcome using cryptographic algorithms. This eliminates the need for blind trust and provides verifiable evidence of fairness.
    • P2P Betting: Decentralised platforms like Dexsport enable peer-to-peer betting, where players bet directly against each other rather than against the house. This reduces the potential for conflicts of interest and manipulation, as there is no centralised entity controlling the odds, outcomes or payouts.
  • Reduced Costs and House Edge:
    • Lower Fees: Decentralised platforms often have lower operational costs due to the absence of intermediaries and centralised infrastructure. These savings can be passed on to players in the form of lower fees or better odds.
    • No House Edge: In traditional casinos, the house edge is the built-in advantage that guarantees the casino a profit over time. In P2P betting, this house edge is eliminated or significantly reduced, allowing players to keep more of their winnings.
  • Control Over Personal Data:  Web 3.0 platforms can leverage decentralised identity solutions to enable players to verify their identity without revealing unnecessary personal data (see further below).
  • Censorship Resistance and Enhanced Security:
    • Immutable Record: Blockchain technology ensures that all transactions and bets are recorded on a tamper-proof ledger. This prevents any manipulation of betting history or results, providing an auditable trail for regulators and players.
    • Smart Contract Automation: Smart contracts can automate various aspects of the betting process, such as bet settlement, payout distribution, and dispute resolution. This reduces the potential for human error and fraud, increasing overall platform security and efficiency.
  • Enhanced Anti-Fraud and Security:
    • Immutable Record: Blockchain technology ensures that all transactions and bets are recorded on an immutable ledger. This prevents any manipulation of betting history or results and ensures long-term transparency.
    • Self-Custody of Funds: Players maintain control of their funds in decentralised betting ecosystems. Instead of depositing money into a centralised platform, players use smart contracts to hold funds in escrow until the bet is settled, reducing the risk of platform insolvency or fraud.
    • Faster Payouts: With decentralised systems, the settlement and payout process is automated through smart contracts. Once the outcome of a bet is determined, winnings are distributed instantly and transparently, eliminating the need for delays often seen in traditional betting platforms.
  • Community Governance (DAOs): In decentralised betting platforms, users can have a say in the governance of the platform through DAOs. Players can vote on changes, improvements, or updates to the platform, ensuring that it evolves according to user preferences rather than being controlled by a small group of executives.

 

How Regulators Can Benefit from Web 3.0 Tools to Protect Players

  • Transparent Audits and Monitoring:
    • On-Chain Data Analysis: Regulators can leverage blockchain’s transparency to access and analyse on-chain data, including transaction history, bet records, and smart contract code. This enables real-time monitoring and auditing of betting platforms, ensuring compliance with regulations and identifying potential risks.
    • Smart Contracts: Regulators can evaluate the smart contracts used in decentralised platforms to ensure compliance with local regulations. These contracts can be designed to automate compliance checks, such as preventing underage users or enforcing bet limits, directly into the platform’s code.
  • Improved Fund Security and Player Payouts:
    • Escrow Systems: Smart contracts can ensure that player assets are ‘escrowed’ until bets are settled. These can be audited to guarantee that player assets are adequately protected and that platforms cannot misuse or misappropriate these assets. This is a significant improvement to centralised models requiring solvency, safeguarding and trust arrangements.
    • Insurance Mechanisms: Regulators can encourage or mandate decentralised betting platforms to create blockchain-based insurance pools that automatically cover player losses in the event of smart contract failures.
  • Decentralised Identity and Compliance: 
    • Privacy-Preserving KYC/AML: Web 3.0 identity solutions can enable players to prove their identity and compliance with regulatory requirements without revealing sensitive personal information as standard to a wide range of parties. This enhances privacy while ensuring regulatory compliance.
    • Federated Identity: Players can also tap into federated identity management tools to access KYC that has been done with an existing regulated firm when needed for additional compliance purposes (e.g. source of wealth).
    • Self-Sovereign Identity (SSI): Using blockchain technology, players can have full control over their personal data while still proving they meet necessary regulatory requirements (e.g., age, residence).
  • Algorithmic Monitoring and Fraud Detection: Blockchain analytics tools can be used to monitor betting patterns and identify suspicious activity in real-time. This allows regulators to proactively address potential fraud or money laundering risks.
  • Global Standardisation and Cross-Border Collaboration: Interoperable Regulatory Frameworks: Web 3.0 technologies can facilitate the development of standardised regulatory frameworks and protocols that can be adopted across different jurisdictions. This can streamline cross-border operations and improve the efficiency of international regulatory cooperation.

By embracing Web 3.0 technologies, regulators and operators can create a more transparent, secure, and user-centric online gambling environment that benefits all stakeholders.

The crypto gambling market is poised for further growth and is expected to be the fastest area of growth in online gambling, driven by emerging technologies like NFTs, integration of gambling into the metaverse and the continued desire to wager or bet using virtual assets. As the Web 3.0 space grows, virtual casinos within these digital worlds will offer immersive gambling experiences, allowing players to interact in real-time, enhancing social engagement. Players could own and trade virtual assets like avatar accessories or gamble or be bonused with NFTs, creating a new layer of value in gameplay. 

The ability to make large instant payments globally will continue to drive player engagement. Smart contracts are also likely to be used more frequently to automate payouts and reduce consumer concerns about platform risk (as well as operational costs). As regulatory clarity improves and the technology matures, we can expect more mainstream adoption of crypto payments.

We also expect to see an increasing use of AI in platforms and gambling including for avatars and in-game entertainment. Given the lightly regulated nature of crypto gambling in some jurisdictions we should expect to see operators from those jurisdictions to be early adopters of AI tools that enhance gambling activities, increase user engagement and add additional entertainment value for players. 

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Crypto Casinos and Online Gambling

A guide to crypto casinos and payments in online gambling

Crypto  Casinos  & Gambling

Introduction

The crypto gambling market has grown rapidly, however it proves very difficult to try to value the size of the market given the lack of market transparency. Total online gambling revenue is estimated to be close to $100bn and appears to be growing with a CAGR of around 10-12%. It is estimated that crypto related gambling is anywhere between 10-20% of this total). The most popular virtual assets used for payment are BTC, ETH and USDT. Crypto supporting platforms often offer a wider array of games, including slots, poker, and sports betting. 

Top nations embracing crypto

Crypto gambling includes traditional online gambling (where it is just used as a means of payment) and gambling involving Web 3.0 technologies that use blockchain technology for peer to peer betting on a decentralised basis and within games, for example, to ensure fairness through transparent mechanisms like “provably fair” systems. 

Overall, the crypto gambling market is driven by tech-savvy entrepreneurs that build products that appeal to privacy-conscious individuals seeking fast payments across borders. It continues to expand with innovations like decentralised gambling platforms and the use of NFTs. The popularity of crypto related gambling is expected to be strongly correlated to the interest in crypto assets and alternative cross-border payment methods by people in different parts of the world. It must also be noted that crypto enthusiasts are considered to have a large proportion of what are termed degens, meaning degenerate gamblers, and this makes them an attractive target to operators.

Despite the growth in crypto gambling, regulatory challenges exist. Crypto gambling faces varying degrees of restriction across different jurisdictions. Most of the market is operating in regions with more relaxed regulations on crypto and gambling, such and focused on parts of Asia and some European countries. This contrasts with traditional online gambling, which is usually subject to more established and stricter local regulations in major jurisdictions.

Some of the largest providers include: BC.Game, betpanda, Cloudbet, Stake.com and FortuneJack. There are also a number of large platform providers and aggregators, such as Soft Swiss that offer turnkey solutions for crypto casino operators and whose revenue is estimated to be over $500m per year. Many casinos will also use traditional means to avoid certain online gambling regulation (e.g. prize promotions/sweepstakes which rely on a free entry route to avoid regulation whether using tokens or some in-app ‘gold’ coins).

The use of crypto for online gambling is popular due to several factors:

  • Privacy: Many users value the perceived discretion provided by cryptocurrencies.
  • Faster transactions: Crypto payments tend to be quicker than traditional banking methods, particularly for withdrawals.
  • Lower fees: Cryptocurrency transactions can reduce the cost for both operators and players, compared to credit card fees or bank transfers.
  • Global access: Crypto allows for easy cross-border payments, which can be appealing in markets with regulatory restrictions on gambling or cross-border payment limitations.
  • Gambling Frequency and Value: In jurisdictions which are perceived as lighter touch from a regulatory perspective, less strict problem gambling / responsible gambling rules may be in place therefore not limiting the frequency and amount of gambling by customers as in more regulated jurisdictions.

Data suggests that the United States, Japan, South Korea, Germany, and Canada are among the top markets for crypto usage in general, which includes crypto gambling. 

The geographical landscape for crypto gambling shows varied adoption rates:

  • Europe: Currently leads the online gambling market, with countries like Germany and Italy generating significant revenue. However, only about 12% of European gamblers own cryptocurrencies.
  • Asia-Pacific (APAC): This region is witnessing rapid growth in crypto adoption alongside online sports betting, particularly in countries like India, Malaysia, Vietnam, Singapore, South Korea, and Indonesia, where ownership exceeds 20% among gamblers.
  • North America: The U.S. has a complex regulatory environment with varying state laws regarding online gambling. However, it remains a significant player in both casino games and sports betting including using crypto for payment.

South Korea, in particular, has a very active market for crypto transactions and is a significant player in the global crypto scene, while Japan and the United States lead in overall crypto innovation and adoption. Canada has also become a hotspot for crypto gambling, as it leads in user penetration rates for crypto use in online gambling, largely due to favourable conditions for both users and operators.

Crypto gambling has also become particularly prominent in regions where local currencies are unstable or where traditional payment methods are restricted due to gambling regulations or capital controls.

Further reading:

https://en.cryptonomist.ch/2024/09/14/global-crypto-leaders-top-countries-driving-cryptocurrency-usage-2024/ https://techreport.com/statistics/crypto-gambling-market-statistics/ 

Traditional Online Gambling Jurisdictions

Many major jurisdictions in the regulated online gambling sector (e.g. those operating from Gibraltar, the UK and Malta) have been relatively slow to permit crypto payments or blockchain gambling. Malta released guidance in 2023 on the use of virtual assets for online gambling which suggests a more constructive approach is now being taken, whereas Gibraltar reviews each proposed use on a case by case basis and the UK is particularly cautious. In addition, we have not seen a jurisdiction really grapple with the impact of Web 3.0 technologies on operator requirements and technical standards, which presents an opportunity.

The caution is primarily due to concerns about the ability to apply existing licence conditions and regulatory requirements to crypto payments and web 3.0 infrastructure, AML/CTF concerns and a desire not to upset the applecart in respect of their existing traditional operator market. 

In addition, in some jurisdictions the regulators remain sceptical or cautious about the use of cryptocurrency and are wary of the risk that it would increase cross-border scrutiny and political opposition to their existing market position and operators. Traditional major online gambling hubs are concerned about enabling higher risk activities that could give rise to AML/CTF concerns and even potentially a heightened risk of FATF greylisting for the jurisdiction as a whole.

Cross-Border Licensing

It is important to note that many licensed operators maintain multiple licences around the world since there are jurisdictions that licence operators based on where games are advertised and offered and not on the country of establishment of the operator (e.g. Great Britain). This is also the case for crypto gambling operators.

Curaçao

Curaçao is a Caribbean Antilles island near Venezuela and is part of the Kingdom of the Netherlands. It is currently the largest hub for crypto gambling operators. This was largely due to Curaçao’s lenient regulations and the ease of obtaining a gambling sub-licence by partnering with a master licence holder. However this regime is rapidly changing with new gambling requirements coming into force limiting and controlling the use of sub-licensees. 

Why Curaçao is a Major Hub

  • Favourable Licensing Environment: Curaçao offers cost-effective, all-inclusive gambling licences, which cover various types of gaming activities, including online casinos and sports betting. The process is relatively fast and simple compared to other jurisdictions, making it an attractive option for operators.
  • Regulation of Crypto Gambling: Unlike stricter regions, Curaçao has traditionally been more accommodating toward cryptocurrencies, which has made it a go-to destination for crypto gambling platforms. The island’s licensing regime allows operators to accept and make payments in crypto. It has traditionally been considered a light touch for AML/CTF compliance (see below).
  • Tax Benefits: Curaçao also offers tax advantages, such as an effective rate of 2% corporation tax on net profits for international business companies and no VAT. This makes it even more attractive to operators who want to keep their costs low while maintaining the legitimacy of having a licence.

Comparison to Other Jurisdictions

  • In contrast to stricter jurisdictions like the U.S., where crypto gambling faces significant legal barriers, or European countries like the UK, where operators must navigate complex regulatory environments, Curaçao’s framework is much more flexible, enabling faster entry into the market for crypto gambling businesses. However, it must be noted that Curaçao has also been forced to undertake a major overhaul of its AML/CTF framework due to international pressure and concern about FATF grey-listing following the 2023 National Risk Assessment.
  • Tobique: We have also recently seen newer entrants like Tobique (First Nation, New Brunswick, Canada) enter the market and offer a regulatory environment by way of self-governing regulatory body (Tobique Gaming Commission) that supports crypto gambling subject to compliance with the various anti-money laundering and consumer protection requirements.

 

Crypto gambling involves significant risks:

  • Regulatory uncertainty/consumer risk: One of the primary risks is the lack of clear regulation, with many countries not having legal frameworks for crypto related gambling. This can lead to unlicensed operators and grey market activity for consumers based in countries with ostensibly strong regulations for online gambling and make it harder for consumers to obtain redress when they are harmed by unfair practices or fraud.
  • Money Laundering: A major concern for regulators is money laundering. Whilst the risk and impact of money laundering in online gambling is generally perceived to be relatively low compared to many other activities, the addition of cryptocurrencies to the mix means that crypto gambling platforms are perceived as more susceptible to misuse, raising issues with AML/KYC compliance (unless additional checks are in place).
  • Taxation: Taxation and reporting for tax owing on crypto related activities is often unclear or complex in many countries, creating potential issues for both operators and players in reporting and paying taxes. Some regions are also increasingly targeting crypto gambling platforms with regulatory crackdowns, resulting in potential bans or restricted operations.
  • Access to traditional payment services/ FATF Grey List concerns: Additionally, crypto gambling platforms face difficulties accessing traditional banking services, as financial institutions are wary of higher-risk activities. The use of stablecoins and privacy coins may also invite scrutiny, especially regarding sanctions and anti-money laundering regulations. This can make larger online gambling hubs and operators more cautious about supporting adoption.
  • Technological risks: Platform security and smart contract vulnerabilities, can lead to hacking and exploitation, prompting regulatory oversight on cybersecurity measures. Crypto gambling operators must implement robust compliance strategies to mitigate these risks and seek licensing in crypto-friendly jurisdictions to maintain operations.

The Markets in Crypto-Assets Regulation (MiCAR), adopted by the European Union in 2023 and set to come into full effect by the end of 2024, primarily aims to regulate the cryptocurrency industry, providing a unified framework for crypto assets, stablecoins, and crypto service providers across the EU (actually the EEA). Its interaction with online crypto gambling is indirect. 

MiCAR is not designed specifically to regulate crypto gambling, but its impact will be felt indirectly through its regulation of crypto-assets, stablecoins, and service providers. It could help the market by providing greater legal certainty and consumer protection, which may encourage broader acceptance of crypto in gambling. However, it could also hinder the market by imposing higher compliance costs and operational burdens, particularly for smaller platforms or those operating in less-regulated environments. Gambling itself remains outside of MiCAR, and each EU member state will continue to regulate online gambling independently.

MiCAR’s Core Objectives

MiCAR focuses on regulating crypto-assets that are not currently covered by existing financial regulation (like MiFID II) and aims to: ensure consumer protection and market integrity; address anti-money laundering (AML) risks; regulate stablecoins, which are commonly used for transactions in crypto gambling; regulate the offer of tokens including token sales and  provide clarity on the regulatory environment for crypto service providers operating across EU member states by harmonising regulatory permissions and passporting rights.

Gambling and MiCAR: Is Gambling Regulated By MiCAR?

While MiCAR is a comprehensive regulation, gambling activities themselves are not specifically targeted by MiCAR. The regulation is focused on crypto-assets and service providers related to trading, issuance, and custody of cryptocurrencies. Online gambling, including crypto gambling, remains governed by national gambling laws within the EU.

Gambling in the EU is largely a national competence, meaning each EU member state regulates gambling according to its own rules, even with the implementation of MiCAR. Thus, MiCAR does not directly regulate gambling activities or operators. Crypto gambling platforms may still be impacted due to how MiCAR applies to crypto-assets and payment services.

  • Since gambling regulations remain a national matter, individual EU member states retain the authority to regulate or ban online gambling as they see fit. For example:
    • Some countries have strict regulations or bans on online gambling (e.g., Poland, Germany), while others have more crypto-friendly frameworks (e.g., Malta, Estonia).
    • In member states where crypto gambling is already regulated (like Malta), MiCAR may enhance legal certainty for platforms, especially concerning stablecoin usage and crypto payments.

Indirect Impact of MiCAR on Crypto Gambling

One of the key areas where MiCAR will affect the crypto gambling market is the regulation of stablecoins, which are widely used in online gambling to avoid cryptocurrency volatility. MiCAR imposes stringent requirements on issuers of stablecoins, including: capital and reserve requirements for stablecoin issuers, regular audits and transparency obligations, limitations on non-euro-denominated stablecoins for payment services in the EU.

These rules could have both positive and negative impacts:

  • Positive: 
    • If well-regulated, stablecoins will become safer and more reliable, leading to broader acceptance in the gambling industry. 
    • Consumers will have more confidence in using stablecoins on gambling platforms, knowing that issuers are regulated and the risk of default or failure is minimised.
    • Gambling regulators are more likely to approve the use of stablecoins and other crypto assets that are accepted under MiCAR.
  • Negative: The increased regulatory burden may reduce the number of stablecoin issuers, limiting options for gambling operators, or increase operational costs for crypto payment services, which could deter smaller platforms from adopting crypto payments.

Web 3.0 is the next evolution of the internet, promising a more decentralised, user-centric, and intelligent web experience, largely driven by advancements in artificial intelligence (AI), machine learning (ML), and blockchain technology.

Decentralisation 

One of the core principles of Web 3.0 is decentralisation. Unlike Web 2.0, where large companies control vast amounts of user data, Web 3.0 aims to give control back to the users. Blockchain technology better enables peer-to-peer networks and decentralised data storage, allowing for the secure and transparent transfer of data and assets without the need for intermediaries like Google, Facebook or large banks. This can manifest through decentralised applications (dApps), which run on blockchain networks like Ethereum, rather than centralised servers.

Metaverse

The metaverse is a virtual, interconnected space where people can interact, socialise, and trade. Web 3.0 enables true digital ownership through NFTs. Users can own virtual land, avatars, art and assets that are verifiably theirs, independent of any platform provider. This allows for greater interoperability across different virtual worlds, as these assets can be transferred or used in multiple metaverse environments. DeFi further supports a new economic model for the metaverse, where users can trade, invest, and monetise their assets without relying on centralised financial institutions. Web 3.0 is the backbone that makes the metaverse scalable, secure, and user-centric, driving innovation and empowering individuals within virtual spaces.

DAOs

One significant development that has sought to unlock the benefits of blockchain is the use of Decentralised Autonomous Organisations. These enable communities of people that hold the relevant governance tokens to vote on the development tasks, budget allocation and other key issues in relation to the community dApp. In some cases this can make it challenging to apply traditional regulatory frameworks (securities law, collective investment scheme rules, online gambling requirements)  to these platforms and products since there may be no central controller or manager of the products.  

Semantic Web / AI

Another key feature of Web 3.0 is the use of the semantic web, where websites and applications can understand and interpret data in a way that resembles human understanding. By integrating AI and machine learning, Web 3.0 can create more personalised and adaptive experiences..

Personalisation and Control 

Web 3.0 enables users to have greater control over their personal data. Blockchain allows for the creation of self-sovereign identities where users control who accesses their data, as opposed to the current model where companies own user data. Cryptocurrencies and DeFi are a good example of this shift, allowing users to conduct financial transactions without intermediaries and securely store their wealth on blockchain wallets.

Interoperability 

Web 3.0 emphasises cross-platform integration, where services and applications can work together seamlessly across different platforms. For instance, a user could log into various services using a single blockchain-based identity or move digital assets (like NFTs or tokens) between different dApps and platforms.

Web 3.0 Examples

  • DeFi Platforms: like Aave or Uniswap allow users to lend, borrow, and trade digital assets without relying on traditional banks or brokers. 
  • Publishing Platforms: Projects like Steemit or Mirror.xyz allow users to publish content while maintaining ownership over their data, and they can be rewarded in cryptocurrencies. 
  • Gaming and Asset Ownership: Blockchain-based environments like Decentraland and Axie Infinity let players truly own in-game assets (such as land or characters), which can be bought, sold, or traded on decentralised markets.
  • Gambling: Decentralised sports betting exchanges like dexsport.io and casinos like BC.Game which state that they use provably fair games and provide a validation tool.

Further reading:

https://coincodex.com/article/41035/provably-fair-crypto-casinos/

Web 3.0 technologies, particularly blockchain, offer numerous advantages for both regulators and customers in the online gambling industry. These benefits stem from increased transparency, security, and user control, which can foster a more trustworthy and efficient gambling environment. As always, these benefits also come with risks that need to be sensitively handled, not least because blockchain is so reliant on trust in the quality of the code that is being used and that can be verified. 

The choice of blockchain and blockchain protocols (rules and algorithms that define how the network operates) by operators is crucial.

Advantages to Players of Decentralised P2P Betting and Provably Fair Games

  • Transparency and Trustworthiness: 
    • Provably Fair Games: Traditional online casinos often use Random Number Generators (RNGs) to determine game outcomes, but players have to trust that these RNGs are fair and not manipulated. In contrast, provably fair games, like those offered by Stake.com, enable players to verify the fairness of each outcome using cryptographic algorithms. This eliminates the need for blind trust and provides verifiable evidence of fairness.
    • P2P Betting: Decentralised platforms like Dexsport enable peer-to-peer betting, where players bet directly against each other rather than against the house. This reduces the potential for conflicts of interest and manipulation, as there is no centralised entity controlling the odds, outcomes or payouts.
  • Reduced Costs and House Edge:
    • Lower Fees: Decentralised platforms often have lower operational costs due to the absence of intermediaries and centralised infrastructure. These savings can be passed on to players in the form of lower fees or better odds.
    • No House Edge: In traditional casinos, the house edge is the built-in advantage that guarantees the casino a profit over time. In P2P betting, this house edge is eliminated or significantly reduced, allowing players to keep more of their winnings.
  • Control Over Personal Data:  Web 3.0 platforms can leverage decentralised identity solutions to enable players to verify their identity without revealing unnecessary personal data (see further below).
  • Censorship Resistance and Enhanced Security:
    • Immutable Record: Blockchain technology ensures that all transactions and bets are recorded on a tamper-proof ledger. This prevents any manipulation of betting history or results, providing an auditable trail for regulators and players.
    • Smart Contract Automation: Smart contracts can automate various aspects of the betting process, such as bet settlement, payout distribution, and dispute resolution. This reduces the potential for human error and fraud, increasing overall platform security and efficiency.
  • Enhanced Anti-Fraud and Security:
    • Immutable Record: Blockchain technology ensures that all transactions and bets are recorded on an immutable ledger. This prevents any manipulation of betting history or results and ensures long-term transparency.
    • Self-Custody of Funds: Players maintain control of their funds in decentralised betting ecosystems. Instead of depositing money into a centralised platform, players use smart contracts to hold funds in escrow until the bet is settled, reducing the risk of platform insolvency or fraud.
    • Faster Payouts: With decentralised systems, the settlement and payout process is automated through smart contracts. Once the outcome of a bet is determined, winnings are distributed instantly and transparently, eliminating the need for delays often seen in traditional betting platforms.
  • Community Governance (DAOs): In decentralised betting platforms, users can have a say in the governance of the platform through DAOs. Players can vote on changes, improvements, or updates to the platform, ensuring that it evolves according to user preferences rather than being controlled by a small group of executives.

 

How Regulators Can Benefit from Web 3.0 Tools to Protect Players

  • Transparent Audits and Monitoring:
    • On-Chain Data Analysis: Regulators can leverage blockchain’s transparency to access and analyse on-chain data, including transaction history, bet records, and smart contract code. This enables real-time monitoring and auditing of betting platforms, ensuring compliance with regulations and identifying potential risks.
    • Smart Contracts: Regulators can evaluate the smart contracts used in decentralised platforms to ensure compliance with local regulations. These contracts can be designed to automate compliance checks, such as preventing underage users or enforcing bet limits, directly into the platform’s code.
  • Improved Fund Security and Player Payouts:
    • Escrow Systems: Smart contracts can ensure that player assets are ‘escrowed’ until bets are settled. These can be audited to guarantee that player assets are adequately protected and that platforms cannot misuse or misappropriate these assets. This is a significant improvement to centralised models requiring solvency, safeguarding and trust arrangements.
    • Insurance Mechanisms: Regulators can encourage or mandate decentralised betting platforms to create blockchain-based insurance pools that automatically cover player losses in the event of smart contract failures.
  • Decentralised Identity and Compliance: 
    • Privacy-Preserving KYC/AML: Web 3.0 identity solutions can enable players to prove their identity and compliance with regulatory requirements without revealing sensitive personal information as standard to a wide range of parties. This enhances privacy while ensuring regulatory compliance.
    • Federated Identity: Players can also tap into federated identity management tools to access KYC that has been done with an existing regulated firm when needed for additional compliance purposes (e.g. source of wealth).
    • Self-Sovereign Identity (SSI): Using blockchain technology, players can have full control over their personal data while still proving they meet necessary regulatory requirements (e.g., age, residence).
  • Algorithmic Monitoring and Fraud Detection: Blockchain analytics tools can be used to monitor betting patterns and identify suspicious activity in real-time. This allows regulators to proactively address potential fraud or money laundering risks.
  • Global Standardisation and Cross-Border Collaboration: Interoperable Regulatory Frameworks: Web 3.0 technologies can facilitate the development of standardised regulatory frameworks and protocols that can be adopted across different jurisdictions. This can streamline cross-border operations and improve the efficiency of international regulatory cooperation.

By embracing Web 3.0 technologies, regulators and operators can create a more transparent, secure, and user-centric online gambling environment that benefits all stakeholders.

The crypto gambling market is poised for further growth and is expected to be the fastest area of growth in online gambling, driven by emerging technologies like NFTs, integration of gambling into the metaverse and the continued desire to wager or bet using virtual assets. As the Web 3.0 space grows, virtual casinos within these digital worlds will offer immersive gambling experiences, allowing players to interact in real-time, enhancing social engagement. Players could own and trade virtual assets like avatar accessories or gamble or be bonused with NFTs, creating a new layer of value in gameplay. 

The ability to make large instant payments globally will continue to drive player engagement. Smart contracts are also likely to be used more frequently to automate payouts and reduce consumer concerns about platform risk (as well as operational costs). As regulatory clarity improves and the technology matures, we can expect more mainstream adoption of crypto payments.

We also expect to see an increasing use of AI in platforms and gambling including for avatars and in-game entertainment. Given the lightly regulated nature of crypto gambling in some jurisdictions we should expect to see operators from those jurisdictions to be early adopters of AI tools that enhance gambling activities, increase user engagement and add additional entertainment value for players. 

Case Studies

  • Advising a client on a gambling licence review and licence suspension by the UK Gambling Commission. The work involved a complete recalibration of all compliance processes and redrafting of policies and procedures, assistance with Regulatory Panel hearing and preparation for 3rd Tier Tribunal proceedings. The suspension was successfully lifted in under 3 months.
  • Designing the legal and corporate model for a global prize draw offering outside the definition of gambling. This involved working with lawyers from multiple jurisdictions to analyse and build the legal framework around which the corporate structure, tax optimisation and operational flows could be implemented.
  • Advising a pay for play skill gaming operator on all commercial and regulatory matters as it rolls out its mobile app worldwide. This involves jurisdiction by jurisdiction analyses of the skill gaming and gambling landscape.
  • Successfully assisting with multiple online gambling licence applications in the UK and GIbraltar.

What do clients say?

Andrew has played a key part in helping Tripledot Fortune navigate the regulatory complexities of operating pay to play skill games across multiple jurisdictions. His commercial awareness and solutions oriented approach has been crucial in growing our business
Guy Gussarsky
CEO of Tripledot Fortune

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Our Betting & Gaming Team

Peter Howitt

Peter Howitt

Managing Director

peterhowitt@ramparts.gi
accounting, fund administration, tax filing and company set up

Heather Adamson

Head of Fiduciary

heatheradamson@ramparts.gi
Ramparts are Legal & Regulatory Specialists

Andrew Tait

Head of Betting & Gaming

andrewtait@ramparts.gi
Ravi Viroomal

Ravi Viroomal

Fiduciary Business Development Manager

raviviroomal@ramparts.gi
Steven De Lara

Steven De Lara

Head of Litigation, Trusts and Financial Services

stevendelara@ramparts.gi
Nicholas Borge

Nicholas Borge

Director

nicholasborge@ramparts.gi