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The Role of Bitcoin in the Chinese Gambling Industry

January 30, 2020 385 0
The Role of Bitcoin in the Chinese Gambling Industry

China is unlike other nations that prohibit cryptocurrency utilization. It presents a promising future for Bitcoin industries to flourish across the region. Bitcoin is banned in the mainland, as the People’s Bank of China (PBOC) deems appropriate. However, individuals can still trade on exchanges such as BTC China and OKCoin. That places the Asian economic powerhouse on the list of giant players in the Bitcoin market. The Bitcoin gambling niche is a different story though.

The illegal online gambling market in China purportedly yields several billion dollars. Such increases the possibilities of money laundering activities. Considering the skyrocketing revenue generated from online and land-based gambling, there are indeed high hopes for the Chinese Bitcoin casino market.

China’s Restrictive Relationship with Gambling

Despite China's strict policies against gambling, several forms of legal betting are available in the Chinese mainland. That includes lottery, sports betting, and digital terminal games that function like slot machines. Even so, many forms of gambling, such as poker, mah-jong, casino games, and sports betting with non-approved channels are illegal. The country spent centuries attempting to curb gambling and even banned it completely in 1949. But interestingly, it has been rated as the most significant legalized gambling market in the world.

There is a law that criminalizes non-approved forms of gambling in the Chinese mainland. Article 303 of the Criminal Law of the People’s Republic of China reads: “Whoever, for the purpose of profit, gathers people to engage in gambling, runs a gambling house or makes gambling his profession shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also be fined.”

The law is relatively vague and does not make casual gambling illegal. However, authorities usually consider it a crime because of the old policy dating back to Mao’s time. The level of crime between players betting with foreign gambling websites and illegal land-based casinos is similar. While the authorities are very active in prohibiting access to these websites, players still find ways to use them. It is also very unusual to hear of any individuals arrested.

What are Bitcoin Casinos?

Bitcoin’s popularity as a cryptocurrency has enabled a new economy to thrive in parallel to the fiat-based economy. Bitcoin transactions are becoming more popular. They have allowed a new arena for gaming, lotteries, and gambling via online Bitcoin casinos.

Today, several internet casinos transact solely in Bitcoins. Other casinos offer Bitcoin as an additional currency of transaction, besides transactions in fiat currencies such as USD. Online casinos offering gambling and money based games in Bitcoin continue to multiply. Bitcoin casinos operate worldwide and are subject to local regulations. Through Bitcoin transactions, these casinos provide different options for players to bet their Bitcoin on online lotteries, sports-based betting, casino games, spread betting, and gambling games. Some popular Bitcoin casinos include BitLotto, BtcSpiortsBet, bc-casino.com, bitzino, StrikeSapphire, swichpoker, satoshibet, Satoshidice, and several others.

Payments in fiat currencies allow monitoring and identifying individual players, casino operators, and dealers. However, the same is not the case with Bitcoin casinos. Bitcoin transactions are entirely digital, hence making audit and verification difficult. Moreover, the ability to pay anonymously using cryptocurrency lets players retain their anonymity. Consequently, that makes fair business practices more questionable.

Most Bitcoin casinos require minimal user information (usually limited to only login name and email). There is no need for location checks, age verification, or other details. Gambling is illegal in many nations, and Bitcoin casinos make it harder to regulate it at a global level.

Even with the Chinese government’s limiting powers over the gambling markets, several Bitcoin casinos cater to online players. The Bitcoin casino industry sure has a future in the nation. Its core technology will let the local gambling sector reach new heights sans bordering on being illegal.

Crypto Gambling Regulation Across the Globe

While most nations have existing regulations regarding online gambling, only a few countries regulate crypto gambling. They include Belgium, Greece, Italy, Poland, the Netherlands, and the United Kingdom. Many nations do not consider Bitcoin as a legal payment method under current guidelines. Meaning, it should not be utilized in gambling. Apparently, more clarity on that matter is necessary for different nations.

In Japan, its strict gambling policies apply to gambling with digital currency as well. The country has also passed laws that impact the utilization of cryptocurrencies. These include the Financial Instruments and Exchange Act and the Payment Services Act.

There are a handful of technical and regulatory challenges encountered by successful adoption in casinos. Nonetheless, the international gambling industry continues to become crypto-friendlier. Online casinos, as well as popular Las Vegas establishments, are already starting to accept Bitcoin and other digital currencies.

Is Bitcoin Banned in China?

China is home to many Bitcoin mining farms, thanks to plenty of regions offering cheap, subsidized electricity. Such makes mining a lucrative venture in the country. However, the PBOC has previously said that “it would block access to all domestic and foreign cryptocurrency exchanges and ICO websites.”

According to the news, the country is looking to clamp down on “all cryptocurrency trading with a ban on foreign exchanges.” China has been issuing regular advisories and taking steps to prevent crypto utilization within the nation. The recent development may wholly eliminate local crypto trading and mining activities.

In September 2017, Chinese regulators banned ICOs and termed them illegal in the country. The ban resulted in a quick 6% drop in Bitcoin prices. Shanghai-headquartered BTCC Bitcoin exchange has also halted its Chinese trading operations.

China’s regulatory actions seek to regulate the escalating craze involving decentralized, non-regulated digital currencies, which have previously skyrocketed to astronomical valuations. Despite the ICO ban and momentary decline, however, crypto trading continued in China. Several participants are turning to foreign exchanges, such as those based in Japan or Hong Kong, to deal with digital currencies.

The Chinese central bank advises against the circulation of cryptocurrencies as a currency. It explained that they have no legal status to make them equivalent to money. They are also not issued by a recognized monetary institution. The PBOC has prohibited local financial institutions from any financing and dealing in crypto-related activities. It is also strengthening regulations on domestic dealers engaged in foreign crypto transactions and ICOs.

Pros of Gambling with Bitcoin

Using Bitcoin is simple, and transactions are quick and secure. It ensures privacy for players as well as casino owners. It prohibits any third party to access their personal and financial information. Additionally, individuals will not encounter the chargeback issues associated with traditional credit cards.

Online gambling is still illegal in many countries. Therefore, some banking institutions do not process transactions to and from gambling websites. That leaves players without any choice but to seek alternative deposit methods. That is where Bitcoin comes in. The transaction is not processed through a third party and payment can be made without a debit or credit card.

Moreover, Bitcoin deposits and withdrawals are instantaneous. Although most traditional payment processors provide instant deposits, withdrawals take at least two to three days. But with Bitcoin, you can instantly withdraw your funds. When you transfer funds to a casino’s Bitcoin address, the amount is credited immediately after confirmation. Using Bitcoin as a primary withdrawal/deposit processor eliminates hefty bank transaction fees and lets you remain anonymous.

Cons of Gambling with Bitcoin

Casinos accepting Bitcoin are not required to hold a license issued by a specific jurisdiction. It is common knowledge that licenses often come with significant application fees. Online casinos can save the money they would otherwise shed on a license application.

While Bitcoin continues to gain popularity, only a handful of online casinos support Bitcoin as a deposit or withdrawal method. Another downside is that Bitcoin can be a volatile currency. Meaning, the exchange rate can fluctuate instantly. Of course, that can work for or against you. Additionally, there are instances when Bitcoin withdrawals can take longer than withdrawals to debit or credit cards. That is because some websites prefer to process the Bitcoin withdrawals manually for security purposes.

On top of that, non-tech savvy individuals might need some time to get used to dealing with Bitcoin. Nonetheless, the user interface of most casinos and wallets is becoming more convenient to work with. Security can also be a concern. Online gambling operators can not steal funds from your wallet. However, Bitcoin exchanges are somewhat problematic, considering that some of them were hacked in the past. Although that does not occur frequently, it is also not impossible.

Is Gambling with Bitcoin the Perfect Solution?

Bitcoin can provide a solution to China’s restrictive relationship with gambling—one that is both player- and operator-friendly. It is capable of transforming the gambling market into a more cost-efficient, convenient, and transparent industry.

Bitcoin lets individuals gamble online anonymously and enjoy the provably fair concept. Transactions are transparent and processing is near-instantaneous. Additionally, purchasing the cryptocurrency for the bankroll and exchanging them later for fiat money is convenient. That is due to the various types of technology currently available.

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