UK Gambling Commission To Allow Bitcoin Gambling Starting This Fall

Posted on August 9, 2016 - Last Updated on September 23, 2020

[toc]The UK Gambling Commission (UKGC), the regulatory body for gambling in the United Kingdom, will allow licensed casinos to deal in digital currencies from October 31, 2016.

The UKGC’s license conditions and codes of practice (LCCP), released this past week, addresses Bitcoin and other digital currencies in Section 5.1, stating that:

“Licensees … must implement appropriate policies and procedures concerning the usage of … cash equivalents (bankers [sic] drafts, cheques and debit cards and digital currencies).”

The measures are designed to reduce the risk of using digital currencies and online gambling sites for money laundering. The LCCP rules will come into effect from October, but only for companies operating in the UK market.

No major regulatory body has made rules for the use of Bitcoin and other digital currencies as of yet, despite their prevalent use in the world of online casinos and online gambling transactions.

About Bitcoin and digital currency

Digital currency is an online method of exchanging goods and services, separated from physical currencies and allowing for instantaneous, anonymous transactions.

Bitcoin is the most well-known digital currency and are created when users use their computers to verify and record payments (mining). Bitcoin miners receive transaction fees and newly-created Bitcoins.

The volatility of Bitcoin is very high, over 18 times that of the US dollar, and one Bitcoin has been worth as little as $2 and as much as $1,242 between 2011 and 2013.

Bitcoin and online gambling

The anonymous nature of Bitcoin and other digital currencies has obvious appeal to large parts of the online gambling world, particularly in areas where harsh taxes are imposed on winnings or where regulation makes regular online gambling largely inaccessible.

There are many online casinos that provide the ability to deposit and withdraw using Bitcoins, but most are licensed in Curaçao, which historically has a very laissez-faire licensing authority when it comes to player-operator disputes. UK players can play on any of these sites, but are only protected by the UKGC when playing at a licensed UK site.

A brighter future for digital currencies?

While the UKGC is the first official regulatory body to formally allow the use of digital currencies, the Isle of Man Gambling Supervision Commission recently proposed allowing virtual currencies.

Additionally, the Malta Gaming Authority discussed this subject just a few days ago.

Last year, the UKGC published an FAQ titled “Why has the Gambling Commission written to Bitcoin operators?” In this, the UKGC emphasised that Bitcoin operators still required a license in order to operate in the UK, regardless of the currencies used for gambling transactions.

Outside of the gambling industry, the European Commission drafted legislation to remove the anonymity of European users of digital currencies. This is ostensibly to halt the use of Bitcoin in illegal activities, including the financing of terrorism.

The UKGC annual report

Last month, the UKGC released its annual report. This promised to take a closer look at digital currencies and esports betting.

The report specifically outlined skin gambling as an area of concern. This practice sees players engaging in Counter-Strike: Global Offensive wagering using “skins” (different types of downloadable game add-ons) via third-party online gambling sites. Some skins are worth hundreds or thousands of dollars.

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Matt Perry

A veteran of the online gambling industry, Matt Perry has worn a number of hats since he first began working in online poker and iGaming in 2007. He currently writes for a variety of publications focused on legal online gambling, and in the past has served as an editor, copywriter, content manager and reporter.

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