Issues affecting Bitcoin and gaming are becoming a very frequent topic of discussion since a number of gaming websites decided to allow Bitcoin transactions and even relevant gambling regulators decided to take actions to protect both operators and players in case of Bitcoin transactions in order to set a friendly environment where such virtual currency can be used. However, the usage of Bitcoin leads to potential gaming law issues as well as non-gaming related issues.
We have already discussed about the general legal issues affecting Bitcoin transactions in this post. However, the match between Bitcoin and gaming websites sets an even higher bar of compliance for operators especially in regulated countries like Italy.
Indeed, the main issue is raised by anti-money laundering regulations that in many European countries including Italy provide for specific rules applicable to land based casinos and gaming halls as well as gambling websites. In this respect, one of the indicators of a suspecious transaction for anti-money laundering regulation purposes relates to cases where players deposit to or withdraw from their gaming account by means of payment means that are not under the name of the gaming account holder. In order to prevent such conducts, online gaming operators have in place specific alert systems, but how can the issue be overcome in relation to Bitcoin?
Some commentators argue that transfers of bitcoins are even more traceable that ordinary cash transactions. However, the question is whether they can be easily traceable by public authorities in case of investigations. Will gaming operators accept payments only in bitcoins held under the name of the gaming account holder? Will gaming operators accept to be subject to more stringent investigations by public authorities in case of Bitcoin transactions?
Bitcoins are a virtual currency that is not regulated and is usually treated as a commodity rather than a currency itself. There is no public authority supervising them and transactions are not processed by “regulated” entities such as banks or financial institutions. Such conditions make more difficult for public authorities to monitor these transactions. And indeed one of the topics on which for instance I am currently working is whether financial institutions and banks can perform investments in Bitcoin as they do with gold or other assets.
An additional interesting issue affecting Bitcoin and gaming related mattes is how to calculate the applicable taxation in case of Bitcoin transactions. In countries like Italy, gaming duties are paid for most of the games on a monthly basis at the end of each month. However, given that the value of bitcoins can considerably fluctuate over the course of a month, if it is considered only the value at the time of the payment, this might be an additional “gamble” for operators and even for players themselves in countries where gaming winnings are not taxed at the source.
There are further interesting topics to be covered in relation to topics affecting Bitcoin and gaming, but I will cover them in the next articles.