I see a lot of people here saying that Bitcoin Gambling sites in the UK do not need to be licensed because "Bitcoin is not money".
The Gambling Commission takes a different view:
Dear ButterflySammy,
Thank you for your email.
You mention that HMRC doesn’t recognise Bitcoin as currency, which is fine.
However, when it comes to gambling, the Gambling Act 2005 defines gambling as the ability to win prizes of money, or money’s worth.
While bitcoin can’t be classed as money, per se, it certainly counts as money’s worth.
The Gambling Commission receives a number of requests from people seeking advice or approval in setting up a business. We do not provide legal advice, including advice concerning the correct interpretation of legislation. Therefore, we cannot advise you regarding the viability or legality of a business idea. It is up to you to obtain your own business or legal advice.
Kind regards,
Licensing Officer
There you have it - Bitcoin is "Money's Worth" even if it isn't "Money" therefor any site operating in or from the UK still needs a license.
If you are betting with or investing in a UK based site you need to be aware that they could be shutdown and take your money with them.
If you run or are plan on running such a site - you need to lawyer up or start filling in the paperwork. I had a look at the fees, it is not cheap, it is not pretty.
Bitcoin online gambling is also under the same regulations as fiat online gambling in most european industrial countries, not just the UK.
And as you mentioned it almost always comes down to the fact that bitcoin is money's worth and therefore it makes no difference.
In fact you could gamble with anything that could be sold for money and you would need a license.
While I think that does make sense, I feel like there should be some sort of global online gambling commision which makes online gambling laws for all countries that are part of it.
This would make the gambling law a lot better for casino owners and law enforcers since at the moment pretty much any type of online gambling is a grey zone unless you literally buy a license in every country in the world.
Such a global online gambling commision could also set a fixed tax agreed on by its members, collect it and distribute it fairly to the countries.(depending on how much profit has been made from people from which country)
I hope this will happen some day but I sadly don't see it coming anytime soon since gambling seems to be a taboo to governments and media.(besides the 50% house edge state lottery which is there to "protect" people)
Gambling is a HUGE market, a LOT of people gamble, it's a human urge so in the long run the governments must agree on some kind of law since online gambling is a global market.
It did have some affect on bitcoin sites. Directbet and Fairlay seems to have blocked UK based IP's already .
blocking IP's of some site is like fighting with wind mills. in world of dynamis DNS, cheap VPS and anonymous domain, almost nothing can stop you..
While this is true it will still certainly make some people from the UK not play due to them either not wanting to go through the hassle of getting a foreign IP or them simply being scared of law enforcement.
It's kind of like locking your bike. While most people will not steal it because it's too much hassle due to it being locked, if somebody really wants to steal it they can still do it very easily.
Making something harder to do will stop a lot of people from doing it even if it wouldn't be hard to do it anyways.