Bitcoin Gambling

Bitcoin Gambling: People 1, State 0 – Bits & Pieces #23

What do you do when you can’t tell what’s legal and what’s not? Often, the answer is nothing. We simply rest on our laurels until the gov’ment tells us what’s permitted, because we don’t want to risk getting in trouble.

The online gambling industry in the US has been doing exactly that for several years. Many large poker websites have been refusing service to US players due to legal gray area. Unfortunately, decisions like those are probably the wisest in many cases, because we can’t live our lives or support the cause of freedom very well from a prison cell.

With the dawn of Bitcoin gambling, however, much has changed. Cryptocurrency has been an amazing tool that can allow us to go much further before we start to “risk getting in trouble.” Bitcoin doesn’t care what we do with our money, and if we use it correctly, no one else even has to know what we do with our money.

This has created an evolutionary level of freedom that internet gamblers have quickly come to embrace. Plus, as Bitcoin gambling develops and cryptocurrency progresses in general, I think even more great things will come. Every industry will spot this freedom and will use it to escape the clutches of the state.

The Legality of Online Gambling

While reading up on Bitcoin gambling in preparation for this post, I came across this Wikipedia entry about online gambling in the US. Holy shit.

The convolution goes something like this:

At least one court has ruled that the Wire Act does not necessarily “prohibit Internet gambling on a game of chance.” The Department of Justice, however, has publicly declared that the act applies to all forms of gambling. Even in the private sector, the search engine giants (I’m looking at you, Google.) have banned gambling ads, just in case they might be aiding and abetting.

And that only covers about a paragraph and a half of the entry. Wikipedia describes much more about gambling laws in the US and around the world. I don’t even want to think about how much the subject has actually been litigated over the years. The concept of Bitcoin gambling could complicate things even more, since cryptocurrency is a whole new kind of money that presents a whole new range of possibilities. The bottom line is that online gambling in the US is a massive puddle of gray area.

Many people assume that the practice is illegal because of Black Friday – a day four years ago when several online casino administrators were indicted and millions of players had funds frozen. The industry did fall apart in many ways after those events, but the legal proceedings that followed were not really about online gambling. The actual allegations involved money laundering and bank fraud. That’s why many others hold that it is still quite legal to play internet poker and similar games for real money in most states.

The Success of Bitcoin Gambling

Please do not misunderstand me. I am not surprised that the laws in the US are so confusing. If you’ve ever listened to our weekly Bitcoin podcast, you probably know that my co-hosts and I have a healthy skepticism about the government, to put it lightly.

I point out all of this legal madness because I want to show that it is irrelevant to Bitcoin. Despite the state’s indecision, Bitcoin gambling became one of the first cryptocurrency industries to crop up and it continues to thrive around the globe. There are literally hundreds of Bitcoin casinos out there offering an endless supply of games to play and features to enjoy.

The wild success of Bitcoin gambling is a perfect example of how decentralization and peer-to-peer networks can change our world for the better. Barring perhaps a 51% attack, which is unlikely, no one on the Bitcoin network is more powerful than anyone else. No one needs payment processors or middle-men with special privileges to help make secure transactions. Anyone can do business uninhibited.

Furthermore, Bitcoin can’t see any differences that exist in real life. It doesn’t know the difference between a land-based casino and an online casino. It doesn’t hold hearings to determine if poker is a game of luck or skill. It won’t turn you down if you’re under 18 or 21. It doesn’t even care if you’re a private citizen playing slots or if you work for the state lottery!

This blindness is an amazing feature of Bitcoin. Because it cannot see, it cannot favor or disfavor anyone like the state does. Even more importantly, it cannot commit violence against anyone that it deems less significant or less valuable. If all goes well, these benefits will reach much further than Bitcoin gambling. I think that in time, the entire world will take advantage of these benefits.

A Microcosm of the Future

I get an especially good chuckle out of this story. Bryan Micon was the chairman of Seals with Clubs, a popular Bitcoin gambling site specifically for poker. After having his home raided by the Nevada Gaming Commission, he simply moved to Antigua and launched SwCPoker within weeks. That is the kind of screw-the-state opportunity that we hope Bitcoin will provide to any number of industries in the future.

As usual, I must note that cryptocurrency is far from perfect. Bitcoin gambling has been amazing, but I’m sure it could always be better. Bitcoin might be blind, but it will not instantly eliminate the state, which is far from blind. That said, Bitcoin is still a giant leap forward. Every business, every industry, and every person that embraces cryptocurrency will take the world that much closer to living without the constant threat of violence from our overlords. Let’s make that happen.

Please leave a comment and let me know if you think Bitcoin gambling is changing the world!

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