How Australia’s ban on crypto and credit card payments affects online gambling
On June 11, 2024, Australia enacted a ban on the use of cryptocurrency and credit cards for online gambling, as part of the amendments to the Interactive Gambling Amendment Bill 2023. This new regulation has sparked concerns within the industry regarding its potential effects on both domestic and offshore online casinos.
Protecting players
The Australian gambling industry has recently experienced a wave of significant reforms. One of the first major changes was the introduction of mandatory pre-verification for all customers on online gambling platforms. Additionally, the government has replaced the familiar “Gamble Responsibly” slogan in betting ads with more impactful, evidence-based warnings designed to better address the risks of gambling. In August 2023, the government launched the BetStop initiative, a nationwide self-exclusion registry aimed at protecting vulnerable individuals from gambling harm. Currently, lawmakers are also considering a potential ban on gambling advertising.
The ban on using cryptocurrency and credit cards for online gambling is part of this broader strategy aimed at preventing individuals from wagering money they do not possess, thereby mitigating the risk of financial harm.
Minister for Social Services Amanda Rishworth highlighted that this nationwide ban represents a critical measure in addressing the adverse effects of online gambling. By enforcing these regulations, Australians are restricted to gambling only with funds they already have. “As a result, minimum deposit online casinos have become more appealing, given that they accept initial deposits as low as $1,” explained GambleOnlineAustralia.com.
Inconsistent consumer protection across the industry
However, the ban on credit card and cryptocurrency payments does not apply to online lotteries and keno, creating inconsistencies in consumer protection across different forms of gambling. Kai Cantwell, CEO of Responsible Wagering Australia, expressed concerns that the exemption might drive players toward less-regulated gambling options, undermining the government’s efforts to control the industry.
The government provided a six-month transition period for operators to adapt to the new regulations, with the Communications Regulatory Authority overseeing the implementation. Companies that fail to comply with the ban face fines of up to $157.000.
Offshore casinos unaffected by the ban
The ban does not extend to offshore online casinos, which are beyond the reach of Australian regulation. With the global rise of cryptocurrencies and the decline of the US dollar, many countries have increasingly accepted cryptocurrencies as a payment method. This includes nations such as the United States, the United Kingdom, Canada, Norway, and New Zealand, all of which permit the use of cryptocurrencies in online gambling.
In the United States, cryptocurrencies are legal and widely accepted by businesses for various transactions. However, their use in online gambling is subject to state-specific regulations. Additionally, many offshore cryptocurrency casinos operating in the US lack Know Your Customer (KYC) protocols, resulting in anonymous transactions.
In contrast, the United Kingdom has a well-regulated gambling market that permits the use of cryptocurrencies. The UK Gambling Commission (UKGC) mandates that all cryptocurrency casinos adhere to KYC requirements for their customers. Furthermore, the UKGC ensures that all licensed operators incorporate anti-money laundering provisions into their terms and conditions.
While Australia imposes strict rules on domestic online gambling, Australian players can still use cryptocurrencies to gamble at offshore casinos, as the ban only applies to platforms registered within Australia.
The industry reaction
The ban on cryptocurrency and credit card payments has ignited debate among stakeholders in the gambling industry. Critics argue that the ban could lead to several significant consequences for the sector:
– Reduced access and convenience: The ban may force players to switch to traditional banking methods, potentially reducing their access to and convenience of gambling.
– Shift to unregulated platforms: Australian players who find the ban restrictive may turn to unregulated or offshore casinos, which could expose them to higher security and financial risks.
– Decreased competitiveness and innovation: The ban could hinder the development of the gambling industry in Australia, putting local operators at a disadvantage and limiting their investment in new payment and gaming technologies.
Despite this ban, Australia remains a crypto-friendly country. According to Statista, 25.6% of Australians own cryptocurrency, placing the country ninth globally in crypto adoption.
