Bitcoin gambling in the United States remains a subject of debate in many parts of the country. Betting using Bitcoin or any other crypto has not been expressly outlawed in the country. However, you need to be very familiar with the current legal framework so as not to find yourself on the wrong side of the law. There are a number of laws which govern gambling and which you should read about if you want to fully understand whether Bitcoin gambling is legal or not.
The UIGEA law
It is worth noting that the legality of gambling using fiat currency has already been decided in the United States. The legality of Bitcoin gambling, on the other hand, is yet to be decided. The Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted in 2006. However, poker companies continued to provide services until 2011 when the FBI indicted the founders of three of the largest companies then – Absolute Poker, Full Tilt Poker and PokerStars. The indictments forced companies such as PokerStars to exit the American market.
UIGEA does not expressly ban internet gambling. But it makes it illegal for any online gambling operator to knowingly accept fund transfers. In order to stay on the safe side of the law, the gambling companies keep funds in crypto wallets.
The Illegal Gambling Business Act (IGB)
This Act may affect the operations of Bitcoin gambling sites because it broadly prohibits all gambling activities that are in;
- Violation of the law of a State or political subdivision
- Or if it involves five or more persons who do finance, supervise, manage, direct or own all or part of such business
- And has been in substantial and continuous operation for more than 30 days or has a gross revenue of $2,000 on any single day.
According to IRS, all cryptocurrencies are regarded as property. Therefore, losses and gains should be calculated in order to see the value of the virtual currency. If an online gambling business earns at least $2,000 in Bitcoin in a day, then this Act may apply.
What does it mean for the players
While current laws make it illegal for casinos to accept wagers on the US territory, there are no laws preventing the player from placing a bet. It is for this reason Bitcoin casinos are found outside the U.S territory.
Where do different States stand?
If you live in New Jersey, Nevada or Delaware, you can participate in any gambling activity including the use of Bitcoin. However, the gambling firms providing these services in these states must use a geo-targeting app to ensure the customers are actually in these three states.
It is only in Washington State where residents are prohibited to participate in any online gambling activities. Most of the States do not prohibit or legalize Bitcoin gambling. However, it is important to remember that the FBI stayed for 6 six years before it could indict anyone using the UIGEA law. It might very well be gathering evidence to do further indictments in the future.
In order to be safe, channel your Bitcoins through a number of middleman wallets when sending your BTC. This way, you avoid your KYC information being linked with your online gambling activities. More importantly, though, keep yourself updated because the legal situation of Bitcoin gambling is very fluid.