Cryptocurrency lawyer Adam S. Tracy explains the legal regulation surrounding online gambling and sports betting and its implication for cryptocurrency and bitcoin casinos.
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A former competitive rugby player, serial entrepreneur, trader and attorney, Adam S. Tracy offers over 15 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s transactional experience ranges from initial public offerings, mergers and acquisitions to initial coin offerings, representing the pure startup to NASDAQ-listed entities. As an early Bitcoin adapter, Adam Tracy has been deeply involved in the growth of cryptocurrency and offers a unique, proprietary approach to representing crypto-clients. Adam resides in Chicago, IL with his six dogs/cats, which he is fairly certain is illegal in the town in which he lives.
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Video transcript:
So the question came across my desk regarding the legality and the efficacy of starting a cryptocurrency-based casino or sportsbook, sports wagering platform. And the simple answer to all of that is that it is illegal, right, absent a license within the United States. The Wire Act, which is originally created to prevent wagering by phone, was grandfathered or reinterpreted to include wagering via online. So you have a series of, you know, offshore casinos and sportsbooks such as, like, a bovada.com and things of that nature which, you know, technically, to place a bet using the internet is a violation of the Wire Act, so it’s inherently illegal. And if you’re going to bet with or wager with cryptocurrency, it’s the same thing.
You know, any sort of property that’s used, you know, in the absence or in violation of the Wire Act or in the absence of some sort of license is, obviously, prohibited. There’s been some changes or there’s some challenges ongoing, really, at this point, with the state of New Jersey that wants to offer its online gaming nationwide, and then some various challenges and some pressure to change the Wire Act to allow for domestically-based US online casinos and sports wagering facilities. And you see this a lot with horse racing, which is already sort of legal across the country. But the push into sports betting’s still happening. So as it relates to, you know, anyone wanting to create cryptocurrency-based casino or sportsbook, I’d be very careful with it because you don’t carry the required licensure. And even if you have an offshore platform or book and you reside in the United States, it can be imparted to you as being the promoter of the illegal gambling operation.
So something to definitely consider. If you’re going in that direction, you best be living in a jurisdiction where it’s already legal and remain there if you’re gonna offer your services to citizens and residents of the United States. At the same time, cryptocurrency is actually a really interesting concept in the gaming arena because what you have is, you know, a de facto token or a de facto chip like you have in casinos. And for a long time, casinos have been plagued with AML and KYC issues because you have these sort of untraceable, amorphous chips, whereas, like, a token, a digitized chip, if you wanna call it, would be a great, you know, alternative in a sense.
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