Considering the increased scope of the British online gambling market and its great appeal to local customers, virtual currencies have become a matter of importance to both online gambling operators and their clients. This is exactly the reason why a few months ago the UK Gambling Commission (UKGC) issued a special discussion paper focused on virtual currencies, eSports and social gaming.
The British gaming regulatory authority revealed that it was looking for opinions on crucial matters related to the above-mentioned issues in order to get a better perspective of the risks related to regulation and customers protection.
The Discussion Paper of the UKGC includes an executive summary, clarifications of the nature of gambling in terms of betting, gaming and lottery operations, a special virtual currencies section as well as a eSports and a social gaming section. The gambling regulatory body also provided more information about the Commission’s approach to dealing with companies offering unlicensed gambling facilities. The interested parties were given until September 30th, 2016 to file a response of the Discussion Paper, and the “suitable” opportunities are planned to be issued until the end of the year.
Virtual Currencies
The term virtual currency was first defined by the European Central Bank (ECB) in 2012 as a type of digital money which is basically controlled by the developers and accepted in certain virtual community. The term has been given a definition by other authorities, too, including the Financial Crimes Enforcement Network (FinCEN) and the European Banking Authority (EBA).
Virtual currencies can be categorised by currency flow criteria to several types – closed virtual currencies, virtual currencies with one-direction currency flow and convertible virtual currencies. Depending on what repository or administrator accepts them, virtual currencies are categorised to centralised and decentralised ones.
With the constantly expanding market share of online gambling industry in the UK, virtual currencies have become an inseparable part of online gambling operations. The increasing importance of the matter was exactly what has pushed the UK Gambling Commission to issue the Discussion Paper.
Bitcoin
Bitcoin is the first decentralised digital currency available in the online gambling market. It was officially introduced in 2008 and since then has managed to get established as one of the most preferred payment systems currently used in the online gaming industry. The payment system offers money transactions that are carried out without any intermediary. It is currently owned and operated by Bitpay.
In October 2016, the online bookmaker NetBet officially announced that it had accepted Bitcoin as one of the payment processing methods available on its sports betting website. According to various rumours roaming in the local media, the company has considered adding Bitcoin to the rest of the payment methods accepted on its website after Sportsbet.io, which website payment system is based on Bitcoin, reported success in July.
UKGC Attitude towards Digital Currencies
The UK Gambling Commission has confirmed that digital currencies have left their footprint in the remote gambling industry, becoming one of the latter’s most distinctive features. Back in 2015 the UK regulatory watchdog issued its opinion on a number of misconceptions related to digital currencies and later restated them as a worthy equivalent to real money. As a result, the UKGC considers the use of digital currencies in gambling operations equal to real-money wagering, no matter if it comes to casino, sports betting or other type of gambling.
The UK Gambling Commission also emphasized on the fact that it is very important for every online gambling operator that is to accept such currencies in its payment options to prove they are able to meet all obligations for preventing money laundering or other criminal activities. In addition, the Commission made it clear that it has not changed its attitude towards digital currencies and reminded that all companies that are to use digital currencies on their websites must have been granted with an operating license.
The UK gambling regulatory body also paid attention at the fact that other forms of virtual currencies, called in-game items, have also been found quite popular by both online gambling operators and customers.
Conclusion
Considering the current state of the online gambling market, it is no surprise that the UK Gambling Commission has established digital currencies as equivalent to real money. The country’s regulatory body undoubtedly recognises the growth which different forms of regular digital currencies and in-game items have marked, but also remains firm on its decision to watch for any irregularities and do whatever necessary in order to prevent illegal activities related to using digital currencies in online gambling.
- Author
Daniel Williams
