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Crypto Gambling Taxes and Legality

In the last couple of years, Bitcoin gambling has been more active than ever. There are many benefits players can find 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.

Nonetheless, being a new territory, you should definitely be aware of Bitcoin gambling legal and the tax status of your region. Even after 10+ yrs of BTC’s existence, currently, most countries seem unsure how to classify Bitcoin and its combination with gambling.

In markets that are under heavy regulation, you will not find any crypto bookies with local licenses. That is ok, though, because it is perfectly legal for you to access bookies with offshore licenses. Another interesting fact that authorities bring attention to is that many people forget about taxation when they gamble with BTC or other cryptocurrencies. Don’t be like these guys and end up burying yourself in tax debt. Let’s find out together about the legal and tax status of Bitcoin gambling all over the world.

Is Crypto Gambling Legal

BMB_Crypto paymentsIt 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 this much ambiguity in legislation worldwide. Then there is the fact that, even where it is not outright legal, Bitcoin is not considered illegal. And 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 so much. 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; bookies that are accessible to your country. Therefore, look no further than our list below.

Trusted Crypto Gambling Sites

BMB_SecurityRegardless 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 in this list to have a decent, and mostly offshore, license. By doing this, we increase the chances of actually visiting them and placing your bets regardless of your region’s legal framework. Also, check our article on Bitcoin bookmakers.

Is Bitcoin legal tender and other important questions

BMB_Question MarkBefore 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 the purchase of goods and services, 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.

Instead, in most developed countries like the US, UK, EU and most of Asia, Bitcoin is an asset or property and as we will see later on, taxed according to relevant tax laws. Since BTC is property or asset, therefore to the very least not illegal, the real question for bettors is whether gambling, in general, 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

BMB_UK_FlagAs you know, gambling is fully regulated in the UK by the UKGC. 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, at the moment of writing, 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, which under said license will also be required to follow identity verification procedures anyway.

Thus, you will only find Bookies licensed offshore, usually with a Curacao license, that accept crypto deposits. And when they do, the vast majority 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, too; this is possible due to BTC being decentralized and subject to no sovereignty. In any case, do make a habit of always checking for a license to avoid falling victim to scams.

Bitcoin Gambling Legality in the EU

BMB_Europe_FlagEuropean Union is actually a pretty favourable place to enjoy Bitcoin and gambling. That is because there is no law regulating Bitcoin gambling specifically. Once again, Bitcoin gambling legality comes down to whether gambling is legal or not 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 countries within the EU, you can simply access Bitcoin bookmakers that operate with offshore licensing in most of them. In short, if it seems you can access a betting site in your country and even better if it allows you to register for an account, it means you can play there.

US and Bitcoin Gambling Legal Issues

BMB_USA_FlagThe United States is also in a regulatory fever, with varying gambling laws in different States. As far as Bitcoin Gambling legal issues, 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. The truth is, along with other older legislation, UIGEA is more or less irrelevant by today or plainly just very subject to interpretation. That is why, since they can not effectively come after gambling, the government leverages itself by regulating the inflow and outflow of money.

To sum up, this law prohibits the use of the banking system for gambling purposes in the USA. Another interesting point is that BTC is NOT legal tender in the US, but all gambling laws in the US 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 at the bookie for gambling.

Is Bitcoin Legal in India and What about Gambling

BMB_IndiaIn recent years, India has restricted BTC and all cryptocurrency use through various laws, effectively 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. Therefore, Indian players can only play in, usually, 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

BMB_ListBesides the countries we mentioned earlier, it is also worth checking some other countries and their approach to Bitcoin Gambling legality.

In Australia, even though Bitcoin is legal in terms of property, not 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 considered legal and the country allows residents to transact with it 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. In practice, Canadian bettors mostly opt for gambling sites with offshore licensing and a generous Bitcoin sports welcome bonus. 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 as far as BTC is concerned. See below some of the most strict countries against BTC.

Countries where Bitcoin is Illegal

BMB_StopThere are a handful of countries that strongly oppose the technological advancement Bitcoin and crypto bring. As a general rule of thumb, be very careful if you are using cryptocurrencies in these countries.

⏩ 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, it seems the Russian state is sceptical and tries to figure out the best way to interwoven crypto in the country’s economy, so several laws have been revised and submitted in the last couple of years only. As it stands now, crypto sits in a somewhat grey area, where it is not a crime to hold it, 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, where its residents are forbidden to transact in Bitcoin, but allowed to invest in it.

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

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



Sports Betting with Bitcoin and Taxes

BMB_Sports_GenericMore than 10 years into its existence, lawmakers are still unsure what to make of BTC. Despite being introduced as a means of daily transactions, a digital currency, this has not been the primary adoption so far. Instead, traders, investors and speculators are the main groups that deal with Bitcoin. And there is no greater speculator than a bettor. The popularity BTC has gained in gambling has also been a major field of adoption.

Still, apart from the lawmakers, many people do not actually know what the deal with Bitcoin and taxes is and how is Bitcoin taxed. You should not underestimate this issue 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 have to pay crypto gambling taxes.

How are Bitcoin gains taxed in the UK

neosurf UKAs we will see with many countries, the UK does not impose any taxation on gambling. Instead, it focuses on your Bitcoin profits. Therefore, if your question has been along the lines of do I have to pay crypto gambling taxes, then the answer is yes. As soon as you realize your profits, i.e., selling your Bitcoin and crypto, you are liable to taxation. For clarity, let’s consider the following scenario.

You purchase any Bitcoin at a specific price, proceed to play at a bitcoin bookmaker, have a good win and at the same time, the price of BTC rises. You now have to pay a tax that is equal to the amount of profit, plus the difference between the current price of Bitcoin and the price you bought it. Similarly, you can deduct losses from your taxable amount.

Is Bitcoin subject to capital gains tax in the EU?

BMB_BankrollEuropean 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. Despite the fact the latter is not part of the European Union, it is a European country and a well-known tax haven.

If you are resident in either of these countries, you are also a fortunate player because your gains are not subject to any taxation. On the other hand, there is some tax in Germany. But, like with all things made by Germans, tax law is simple; you pay a capital gain tax of 25% on your Bitcoin winnings, and that is only if they happen within one year after acquiring your Bitcoin. Otherwise, you pay much less because tax law considers them long-term capital gains.

How is Bitcoin taxed when gambling: US

BMB_Money_ProfitMuch like in the UK, the US addresses any gambling winnings in Bitcoin as a capital gains tax. The moment 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 the worth of your initial Bitcoin bankroll and its worth 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, meaning you can at least avoid any extra domestic tax on top of those mentioned above.

How much tax on Bitcoin profit and gambling is there in India

India has a bit of a complex tax system regarding BTC & crypto. This is mostly because BTC is unregulated. You will be paying tax on your winnings, though. Answering how much tax on Bitcoin profit, this ranges from 30% or more, depending on the size and an extra cess is applied almost everywhere 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?

BMB_FeesTaxation varies immensely around the world, and this, of course, applies to how Bitcoin is taxed as well. Australia imposes capital gains tax on BTC profits, whether they come 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.

An important thing to remember is that it does not matter whether you convert your crypto to fiat; tax authorities will come after you no matter what. Suppose you are wondering how they can see what is going on. In that case, governments, in general, can monitor crypto gains. This happens when they enter the banking system the moment their selling occurs; also through exchanges, whose vast majority require KYC verification. 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 proves 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. 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 

BMB_Book SpyBitcoin 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 who banks classify as unbankable and would never get the green light to fund their bankroll. Either because their bank disagrees or there is complete regulation around gambling, even making it unlawful in their country. For more information on the basics, check out our article on Crypto Gambling.

Given BTC's rising popularity, regulators will only 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. But I am sure the burning question for you is how to cash out bitcoins without paying crypto gambling taxes. 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 still staying 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. One other solution you could entertain is moving to tax-free Bitcoin gambling countries, the most notable examples being Germany or Switzerland. You can take some routes in the USA, such as purchasing your Bitcoin for gambling via your savings accounts or creating an LLC, which basically is a business structure and keeps your holdings and winnings there.

Another essential thing to do is not forget to report your losses, as they will help with any deduction in tax. To have a detailed record of all your activity, make sure to export it from every exchange you use. All in all, Bitcoin gambling legality is very achievable but, above all, never gamble with more than you can afford to lose.

Q: Is Bitcoin legal tender?

Bitcoin has not been accepted as a legal tender yet. The only exception is El Salvador, which leads the way, warming up other countries in Latin America mostly to the idea.

Q: Is Bitcoin loss tax deductible?

In most countries where you pay capital gains on Bitcoin, you can undoubtedly deduct your losses, which count as capital losses and reduce the amount of tax you will be paying.

Q: Is Bitcoin gambling regulated?

There is no single answer to this question, as the degree of regulation varies depending on the country. Almost all countries have in common that they do not focus so much on the gambling part but on Bitcoin winnings, regardless of where they came from.

Q: How do I use Bitcoin for online gambling?

Despite a rather steep learning curve, you can use Bitcoin for online gambling more quickly than you think. Check out our guide on Bitcoin Sportsbooks and find out how you can benefit from it.

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