Crypto Gambling Taxes and Legality

Bitcoin gambling has been more active than ever in the last couple of years. Players can find many benefits should they choose to use BTC for gambling. You get faster transactions than with conventional currency, and there are also little to no fees. Under-the-radar betting is now a very tangible possibility, given the increased privacy and no geographical restrictions that cryptocurrencies offer.

As a new territory, you should know whether Bitcoin gambling is legal in your region and what tax laws apply. Even after 15+ years of BTC’s existence, most countries seem unsure how to classify Bitcoin, especially when combined with gambling.

You will not find any crypto bookies with local licenses in markets under heavy regulation. That is ok, though, because accessing bookies with offshore licenses is perfectly legal. Another interesting fact that authorities highlight is that many people forget about taxation when they gamble with BTC or other cryptocurrencies. Don’t be like these guys and bury yourself in tax debt. Let’s find out together about the legal and tax status of Bitcoin gambling worldwide.

Is Crypto Gambling Legal

It is safe to say that Bitcoin is legal in most countries. This comes from the fact that BTC is decentralized, meaning no central authority or entity controls it. Consequently, there can be no law to ban or outlaw Bitcoin per se. This is the reason for the ambiguity in legislation. Then there is the fact that even where it is not regulated, Bitcoin is not considered illegal. This is a grey area where Crypto Bookmakers thrive.

It is also worth noting that only a handful of countries have banned or restricted BTC and gambling. As you can see, the approach to Bitcoin and gambling legislation varies greatly. That is why we need to check country by country. In any case, one thing is for sure. To avoid potential scammers, you should only play in trusted bookies and choose the best crypto exchange for sports betting, which offers accessible services to your country. Therefore, look no further than our list below.

Trusted Crypto Gambling Sites

Regardless of the legal status of BTC per country, it is essential to play at trusted Bitcoin gambling sites. We paid extra attention to all sites on this list to ensure you can find a decent offshore brand. Also, check our article on Bitcoin bookmakers.

Is Bitcoin a Legal Tender?

Before proceeding, it is important to understand the term legal tender. A legal tender is any form of payment recognized by law as a means to settle a public or private payment, such as purchasing goods and services or tax payments. All conventional money we know of is considered legal tender. The main catch in our discussion is that Bitcoin is not considered as such in almost all parts of the world. As for Bitcoin legal tender, the only country that recently recognized BTC as such is El Salvador, a move heralded by Bitcoiners all over the world.

In most highly regulated jurisdictions like the US, UK, EU member states, and most Asian countries, Bitcoin is considered an asset or property and should be taxed accordingly. Since BTC is an asset, the real question for bettors is whether gambling is allowed in a country. Let’s review some of the world’s largest regions separately & case by case, where you can use BTC and a provably fair predictor.

Bitcoin Gambling Legal in the UK

As you know, the UKGC fully regulates gambling. As such, Bitcoin gambling legal status is achievable when operators have a license. Even though UKGC has warmed up to Bitcoin and cryptocurrencies as payment only in the last couple of years, it is almost guaranteed that you will not find a betting site with a UKGC license that accepts crypto. This is due to the logistical nightmare crypto poses for operators, who, under said license, will also be required to follow identity verification procedures.

You will only find Bookies licensed offshore, usually with a Curacao license, that accept crypto deposits. And when they do, most of them convert it to fiat. After the point of the deposit, betting is basically like any other conventional bookie. Regardless, Bitcoin-only bookies can be accessible and legal because BTC is decentralized and subject to no sovereignty. In any case, always check for a license to avoid falling victim to scams.

Bitcoin Gambling Legality in the EU

The European Union is a pretty favourable place to enjoy Bitcoin and gambling. That is because there is no law specifically regulating Bitcoin gambling. Once again, Bitcoin gambling's legality comes down to whether online betting is legal in each EU country. The EU has even voted for no VAT on BTC transactions, classifying BTC as a financial service. Despite the diverse regulatory framework regarding gambling in different EU countries, you can access most Bitcoin bookmakers that operate with offshore licensing. In short, if it seems you can access a betting site in your country and if it allows you to register for an account, you can play there.

US and Bitcoin Gambling Legal Issues

The United States is also experiencing a regulatory fever, with varying gambling laws in different states. Regarding legal issues related to Bitcoin gambling, the current framework in most of them does not expressly mandate that betting with BTC or any other cryptocurrency in online casinos is illegal. As far as USA bettors are concerned, Bitcoin gambling does not differ from any other form of gambling. The catch here is the Unlawful Internet Gambling Enforcement Act.

UIGEA, signed in October 2006, stipulates that banking facilities and credit card companies do not have permission to facilitate transactions related to online gambling. Along with other older legislation, UIGEA is more or less irrelevant today, and its application has become open to interpretation. That is why, since it can not effectively come after gambling, the government leverages itself by regulating the inflow and outflow of money.

To sum up, this law prohibits using the banking system for gambling in the USA. Another interesting point is that BTC is not legal tender in the US, while gambling laws only address legal tenders. Given all the above, the result is that you can gamble with Bitcoin as long as you have purchased it beforehand because it is mostly illegal to buy BTC directly from the bookie for gambling.

Are Bitcoin and Gambling Legal in India 

In recent years, India has restricted BTC and all cryptocurrency use through various laws, prohibiting people and banks from using crypto. Ironically, though, the official stance is neither banning nor allowing BTC. Add to that that online gambling is mostly illegal in India. Indian players can usually only play on UK-based betting sites. For more information, you can check out our article and choose the best Bitcoin Cards for Gambling.

Bitcoin and Gambling Legality: Other Regions

Besides the countries we mentioned, it is also worth checking other countries and their legal approach to Bitcoin gambling.

⏩ In Australia, even though Bitcoin is legal in terms of property and not as a currency, gambling is heavily regulated in the country. Ironically, this is why Bitcoin gambling is booming in The Land Down Under; Australian residents can legally access many offshore Bitcoin bookies.

⏩ In Canada, Bitcoin is legal, and the country allows residents to transact and invest in it. On the other hand, legislation around online gambling is still a bit of a grey area. More precisely, the legislation allows international bookmakers to operate and offer their services to Canadian residents. Canadian bettors mostly opt for gambling sites with offshore licensing and a generous Bitcoin sports welcome bonus. It is not a bad thing at all since there are hundreds of crypto-betting sites to choose from. Nevertheless, check our article on bookmakers in Canada.

Not all parts of the world are very welcoming or positive about BTC. Below are some of the most strict countries against it.

Countries where Bitcoin is Illegal

A handful of countries strongly oppose the technological advancement Bitcoin and crypto bring. As a general rule of thumb, use cryptocurrencies in these countries very carefully.

⏩ China is arguably the most vocal hater of Bitcoin, recently applying heavy regulation and practically banning all things Bitcoin across the country.

⏩ Russia is notorious for having a strict policy on Bitcoin. Nonetheless, the Russian state seems sceptical and is trying to figure out the best way to integrate crypto into the country’s economy. So, several laws have been revised and submitted in the last couple of years leading to the war. Currently, crypto sits in a somewhat grey area, where holding it is not a crime, but you will find it difficult to make any transactions for goods and services. Investments with BTC are rather complex because you have to go through some scrutiny and give away personal information. As for gambling with crypto, you will have better chances playing online at gambling sites with an offshore license rather than in the tightly regulated, locally licensed ones.

⏩ Vietnam follows a unique route. Its residents are forbidden to transact in Bitcoin but are allowed to invest in it.

⏩ Finally, Ecuador is rather hostile against BTC. Its government strictly prohibits using Bitcoin as payment for goods and services.

The funny thing is that all these countries have a long gambling tradition. At this point, we also need to discuss crypto gambling taxes.

 

 

Sports Betting with Bitcoin and Taxes

More than 15 years into its existence, lawmakers are still unsure what to make of BTC. Despite being introduced as a means of daily transactions, this has not been the primary adoption so far. Instead, traders, investors, and speculators are the main groups that dealt with Bitcoin for a long time. And there is no greater speculator than a bettor. BTC's popularity in gambling has also been a major field of adoption.

Still, apart from lawmakers, many people do not know how to deal with Bitcoin and taxes. You should not underestimate this because, depending on where you are coming from, taxation ranges from being a non-issue to a serious problem if you fail to declare. A problem is so serious that it may result in heavy fines, even imprisonment. So, let’s go through some major regions worldwide and answer the age-old question of whether you must pay crypto gambling taxes.

How are Bitcoin gains taxed in the UK

As we will see with many countries, the UK does not impose any taxation on gambling. Instead, it focuses on your Bitcoin profits. This means there are taxes to be paid. You are liable to taxation when you realize a profit, like selling crypto for a higher price than what you bought it for. For clarity, let’s consider the following scenario.

You purchase any Bitcoin at a specific price and proceed to play at a crypto bookmaker. You have a good win, and simultaneously, the price of BTC rises. You now have to pay a tax equal to the profit you made. That would be the difference between the current price of Bitcoin and the price at which you bought it. Similarly, you can deduct losses from your taxable amount.

Is Bitcoin subject to capital gains tax in the EU?

European Union and Europe, in general, are a mixed bag as far as Bitcoin and crypto gambling taxes are concerned. This is natural, given the number of different countries in it. Therefore, some countries have better taxation than others. Some good examples would be Portugal and Switzerland. Although the latter is not part of the European Union, it is a European country and a well-known tax haven.

If you reside in either of these countries, you are also a fortunate player because your gains are not subject to taxation. On the other hand, there are taxes in Germany, but they are simple to calculate; you pay a capital gain tax of 25% on your Bitcoin winnings within one year after purchase. Otherwise, you pay much less because tax law considers them long-term capital gains.

How is Bitcoin taxed when gambling: US

Much like the UK, the US addresses any gambling winnings in Bitcoin as a capital gains tax. When you decide to sell your winnings for fiat or another cryptocurrency, you are subject to crypto gambling taxes. The tax amount varies according to the difference between your initial Bitcoin bankroll and when you cash out. Luckily, since most US states prohibit gambling, as a US resident, you can only play in Bitcoin bookies with an offshore license. You can at least avoid any extra domestic tax on top of those mentioned above.

India has a complex tax system regarding BTC and crypto. This is mostly because BTC is unregulated. You will be paying tax on your winnings. This could reach up to 30% or more, and an extra cess is always applied on all matters in India. Legislation is changing rapidly, so check official sources regularly, or better yet, seek advice from a professional.

How is Bitcoin taxed in other countries?

Taxation varies immensely worldwide, which is also true of Bitcoin laws. Australia imposes capital gains tax on BTC profits, whether from gambling or anywhere else. There is no tax for gambling in Australia. Consequently, the best and most sensible thing to do is document all, and we mean all, your BTC transactions in AUD value. Then, do your best to report everything and get deductions when you lose.

An important thing to remember is that it does not matter whether you convert your crypto to fiat after winning; some tax authorities will come after you as long as they know you own crypto or made gains. Governments, in general, can monitor crypto gains. This happens when the sale enters the banking system; if you bought your coins with a card or any centralized financial service, the company registers and declares the transaction.

Furthermore, when playing on a regulated bookmaker in countries like the US, Sweden, or the Netherlands, to name a few, the bookie is required to hand over your information. You must complete the Know Your Customer forms, and your balance will be handed to tax authorities. If you do not know what KYC is, check out, for instance, our guide on bookmakers without verification.

Another country worth noting is Canada, which proved to be a very lucrative location for gamblers; No crypto gambling taxes burden winnings. As for BTC gains from online gambling, you only pay tax if you convert your BTC to fiat, make purchases or even gift it. There is no tax for just holding onto your crypto as an investment. Frankly, this may very well be the best solution. Lock your crypto in a wallet and come back to cash it out in a couple of years. Sure, you will pay crypto gambling taxes then, but chances are your bankroll will have multiplied immensely by then.

Our Verdict on Crypto Gambling Taxes & Legality 

Bitcoin gambling is here to stay. For us, there is one most exciting part about crypto. For the better part of the world, crypto allows players to enjoy betting and gambling, most of the time, with no questions asked. Without crypto, there would be bettors whose banks classify them as suspicious, and they can never get the green light to fund their bankroll.

This could be because the bank disagrees with the practice and would refuse to give credit to gamblers. The other reason is that you might be living in a country where gambling is unlawful. For more information on the basics, check out our article on Crypto Gambling.

Given BTC's rising popularity, regulators will come after it more and more in the following years. If you want to enjoy gambling with Bitcoin and pay no taxes, it isn't easy to do so. At this point, we want to mention that we do not condone tax evasion. Having said that, there are some strategies you could consider. They may allow you to pay less tax while remaining within perfectly legal standards.

The most prevailing tip is to keep your Bitcoin long enough so it qualifies as a long-term capital gain. In this case, you pay significantly less tax than cashing out earlier. In the USA, there are tricks such as purchasing your Bitcoin for gambling via your savings accounts or creating an LLC, a business structure that keeps your holdings and winnings there.

Another essential thing to do is not forget to report your losses, as they will help with tax deductions. To have a detailed record of all your activity, export it from the exchanges you use. All in all, Bitcoin gambling legality is achievable in different ways depending on where you live. Always remember never to gamble what you can't afford to lose, which also applies to crypto, one of the most lucrative gambles of our time.