Topic: Are gambling games with BTC legal? (Read 2961 times)

We kind of went off the original topic here, which was are online casinos using bitcoin legal. We will actually soon be provably fair too, but that's not really the point. The Cereus scam, can be implemented in any poker site, provably fair or not. Revealing the cards on the table to certain players doesn't require any false generation of cards in a particular order. Kahwanake is the most shady jurisdiction of all, not recognized by any government. It is a total scam. That's why they were able to run such a corrupted organization. There is no control in Kahwanake as long as you pay their fees. The only place that is worse than Kahwanake is Costa Rica. Most players believe that there are actual licenses and control over there. But there aren't. You just incorporate a dummy corporation and you are good to go. That's the reason many countries in Europe closed their markets for non-EU gambling companies. So they could filter the potentially shady jurisdictions and companies. 5 years ago you could launch an online casino and noone would ask you a single question. You could have all the payment methods, service US players, have a stable bank. Nowadays without a proper license you can't even get a bank account, let alone payment processing. The offshore gambling businesses are either dieing slowly or moving to controlled jurisdictions with licensing. Good examples for that are bodog - who is slowly leaving Kawhanake and moving to Europe & Asia, many of the Curacao operations are moving to Malta or Isle of Man, PokerStars moved to Isle of Man and so on. My point is online gambling becomes more and more regulated on a daily basis, and it won't pass the bitcoin casinos and it is coming rather sooner than later in my opinion.

It's already proven that Cereus tampered with their software, putting in a hack that allowed them to see the players card. It's not RNG related but it is a software hack. My argument remains valid.

Bit777 It's not my point to attack you or your casino. I know you licensed your casino software, you are not provably fair, etc and because of that you may think i was "bashing" your casino. I'm truly not, haven't played on there but seems like a ok casino and your undoubtedly run a healthy operation.
I just LOVE the other casinos who do go over and beyond to create provably fair, completely new gaming experiences because Bitcoin for the first time in internet gambling history, lets them.

I'm not going to discuss gaming fees and such, it's way too early for that. Bitcoin is not even a real currency yet and who knows what will happen in the future. Your operational cost numbers are a little exaggerated imo, don't make it look like dooms day and inevitably every casino should close and give up.
Right now it's important that we support every new Bitcoin casino that opens up big or small, each of them is a great thing and can only help Bitcoin forward.
I know we don't have licenses yet, but that's why Provably Fair is a perfect "substitute" right now for the bitcoin community.

There are currently over 350 different casino software providers in the world, accounting for probably 8-10000 different games. Saying "Regular casinos generally offer the same cookie cutter 10-year old roulette flash games over and over" is a nonsense. And how is your casino war game unique or different from ours for example? The graphics might be, but after all its the same standard casino game that everyone else has... It's the same game logic, the same user experience, the same house edge, etc.

Cereus wasn't rigging the RNG, it was allowing employees to play against their players with an option to view cards. So this is not a valid argument.

"Disagree completely, "tested to be fair in laboratories", I think you are picturing it a litle too much fairy tale. In practice everything happens more lax then you imagine.."    I am speaking out of practice (12 years experience in online gambling). It is so stressful to get an RNG or a game certified to be fair that you can't imagine. Every single game is being tested with various tests, such as Chi-Square Tests, Serial Correlation Test, Poisson Distribution Test, Frequency Test, Diehard tests, and so on. After the tests are complete, the system is hooked up to the central server and the code is being checked every month for discrepancies. There are no speculations or child play there. To get a casino with about 50 games certified will cost you around $70,000 and ~ 5 months of testing in the lab.

On a side note related to that, how many of the casinos here are tested with these tests? They might be provably fair, but what if their RNGs are biased or inconsistent in their generation? I've spoken to a few other operators on this forum who didn't even understand how to random generate properly and what technology to use and were and currently are running games. So how safe are the players?

Now regarding competition if it goes mainstream. Even out of the operational costs, most of the sites around here will close. How many will be able to afford a 100k license, a 70k lab test, and 5-10k a month in just licensing fees and taxes. And where will the players prefer to play? In a casino that has a license and is secure and controlled by a serious authority, or in a one that doesn't. So how exactly will you remain competitive?

(not trying to bash you, just being realistic)

+1

Well, I frankly think little of most of these gaming commissions.  Particularly the Kahnawake Gaming Commission, which resisted suspending these clowns for far too long.

However, the software hacks were not related to the deal.  The deal could have been (and as far as I know was) perfectly fair.  The problem was insiders had access to information (like other player's hole cards) that they could exploit to cheat.  Similarly, even without insider access, players can collude by sharing hole card information.  In that case, as well, the RNG dealing the cards would be perfectly fair.  But players would be obtaining an unfair (and against the rules) advantage by cheating.

Disagree completely, "tested to be fair in laboratories", I think you are picturing it a litle too much fairy tale. In practice everything happens more lax then you imagine..
Example? Absolute Poker was licensed by a respectable gaming commission. Didn't stop them from cheating the players for massive amounts through software hacks (http://en.wikipedia.org/wiki/Cereus_Poker_Network)

Provably Fair is a big innovation, it may never see adaption by the industry which I understand, but it's perfectly in line with the values any decent bitcoin casino deems worthy. And at the moment a LOT of bitcoin players appreciate and prefer it above anything else. I still see no reason why any serious Bitcoin Casino would not make their casino Provably fair and I would strongly recommend against playing on any casino that is not.

On your earlier remark of not being able to compete with the giant players if they adopt bitcoin in the near future, I again have to disagree somewhat. (Although of course it would be very heavy competition)

- The chance they will offer the ability to gamble completely using bitcoin (not just converting your bitcoin to fiat) is very improbable.
- Most bitcoin casinos offer custom made software, that is completely unique to that casino. Regular casinos generally offer the same cookie cutter 10-year old roulette flash games over and over, with little creativity and completely dependent of their game licensees. Many of the bitcoin casinos right now, don't be mistaken, CAN compete on software today.

The giant online casinos are under a considerable amount of scrutiny, and would be caught by people like the Wizard of Odds and others if the deal was rigged.  One problem with one kind of gambling (poker) though is that the issue isn't really whether the deal is fair.  No major site has ever been caught rigging the RNG, and only one very early on (Planet Poker) was found to be using a blatantly broken RNG (it was basically totally cracked). 

The problem in online poker is much less the deal than that you might be cheated by other players colluding, something that can and does happen pretty often.  It would be, in the first place, highly impractical to generate provably fair numbers for the largest of the online poker rooms (or casinos for that matter), but even if you did it, you wouldn't have eliminated the main source of getting cheated.

You are correct. They could care less about it. From another point of view though, they are much more proven to be fair compared to the provably fair casinos, as they get audited on an hourly basis, and all the software is tested to be fair in laboratories. As a matter of fact, all of the certified lab software providers are directly linked to the governing jurisdictions, such as Malta, UK, Alderney, etc. Every single bet is instantly logged in the governing authority servers. If there is a slightest chance that it is not fair, the casino directly loses its license. So on top of that, why would they bother implementing a provably fair system...

And the giant online casinos could care less about being provably fair. It's only us smaller single owner / operator types who have to have a provably fair system.

They might care about it though, if they save on licensing costs, if they don't have to pay someone to be gambling audited or compliant. But only if it is not required. Their industry requires it though, and competitors will be quick to complain to the authorities against online casinos that do not have proper documents or audited fairness standards, no matter how provably fair it is.

All blanket statements are complete bullshit.

Yes. It will happen the same way as it happened in the dotcom era. Smaller establishments will die, larger ones will takeover. Except that now there is a major threat for us. *In the case* bitcoin goes heavily into mainstream within the next 2-3 years, I don't see any of us compete with billion dollar establishments with thousands of people staff, such as pokerstars, bwin.party, ladbrokes and others. Right now a lot of the big companies are looking at btc as a gambling payment method due to the ease of use, NO transaction fees (processors usually charge 4-5%) and no chargebacks (a good 2-3% of any real money online casino right now). So even if it doesn't go mainstream, large gambling companies still have a very good use of it, and they consider it already. There have been many talks on the latest igaming shows about bitcoin. The only thing stopping them right now is the volatility of bitcoin. It still seems too insecure for the larger establishments. Otherwise it is a no brainer. You have 200mln a year revenue. 8% of that ~ 16mln goes into processing costs. You have this FREE, instant, secure option to save this 16mln and turn them into profit...You don't need much of a brain to see how it will benefit your business.

And more single developer/operator anonymous (TOR, abuse-resistant hosting) Bitcoin casinos

http://www.onlinepoker.net/poker-news/gambling-news/bwinparty-ceo-arrested-belgian-police/17336
http://www.reuters.com/article/2012/05/21/us-bwinparty-spain-idUSBRE84K0N520120521
http://www.gamingintelligence.com/business/21270-bwin-party-ceo-to-be-charged-in-french-criminal-court
http://www.forbes.com/2009/04/07/partygaming-online-gambling-markets-equity-doj.html
http://calvinayre.com/2011/03/29/business/online-gambling-crackdown-russia/
http://www.onlinecasinoadvice.com/news/bulgarian-police-cracks-down-unlicensed-gambling-operator/

As you can see, it is a common practice in all parts of the world. So the moment there are proper laws in place, defining bitcoins as something of monetary value, we should expect the thunderstorm coming upon us. And it is coming. The more bitcoin goes into the mainstream, the less of "single developer dice/casino game sites" will be able to exist.

This could be correct for the Netherlands, but it doesn't open your road for other countries where the laws might be different just because you are based in a jurisdiction where it is legal.

Anyways. Other opinions are welcome

Casino chips have real monetary value (from point of law they are IOUs issued by casino).

Bitcoin have not yet recognized as any type of property, therefore gambling with it is in grey area, which means that government may legislate acts at any moment and BTC casino owners will have to close their businesses or go underground.

first, this law is aimed at foreign market and I am dutch. Second, the dutch parliament has stated that bitcoin meets only 2 of the 4 criteria with which the law defines money and thus no financial licenses are needed for exchange, securities, financial services and gaming. This has been an explicit statement in Dutch parliament and as gambling is defined as playing for money, these new laws wont apply to bitcoin poker

Yes, this is what I am saying. "In Holland". It doesn't mean you are equally legal in the rest of the world. It only means you are legal in Holland. Also fyi, there is a law coming up soon which will regulate online gambling, and I know your stance right now is that it is legal as bitcoin is not considered money, therefore not gambling, but we will see how it will play out after the law passes.

 http://www.tax-news.com/news/Netherlands_Eyes_20_Online_Gambling_Tax____60889.html

In Holland bitcoin poker is exactly equal to Zynga poker. Just as any tourist is allowed to visit our coffeeshops, they are allowed to use our services as they obey the dutch law

This doesn't really help from a jurisdictional standpoint though. It only avoids the need of a gambling license. He will still have to comply with the laws of each country from which he takes players.

The main issue is if bitcoins can be qualified as 'money by other means'. To give a comparision: in Vegas, people are not playing with real cash, but with chips and these chips are regarded as money by other means, making it gambling.

What you should look for is a country which specificly states that bitcoin isn't money and therefor none of the monetary rules apply (including gambling, securities and exchange). A decent example is The Netherlands...