The British betting industry is understandably fixated on the challenges of taxation next year, but the growing challenges posed by cryptocurrency and crypto-assets cannot be understated, writes SBC News Editor, Ted Orme-Claye.
In all fairness, the UK Gambling Commission (UKGC) has shown an acute awareness of the engagement between crypto and gambling, having earmarked crypto and other digital assets as emerging products and markets to be addressed for the past few years.
A few weeks ago, Commission CEO Andrew Rhodes delivered his CEO Briefing. In this speech, he lamented that he had initially viewed the crypto challenge as a ‘five year problem’, but that in actuality it is more likely a ‘18 months to two years challenge’.
More and more people in the UK are owning and using digital assets, chiefly as an investment but also as a means of payment. This is particularly the case with younger demographics.
According to the Financial Conduct Authority (FCA), around 8% of Britons owned crypto this year – although interestingly this is actually a fall from the year before. However, the passage of the Property (Digital Assets etc) Act earlier this year could have a long-term impact by boosting market confidence.
With crypto ownership will come a desire to use crypto to pay for goods and services – including gambling. Herein lies the problem – crypto gambling operations in the UK are illegal and offshore, therefore are not paying tax and as the regulated industry often points out, lack the protections licensed operators are required to provide.
Deal Me Out ring crypto alarm bells
Last week saw the publication of a report by GAMRS, commissioned by charity Deal Me Out, which focused on the financial and social damage caused by illegal gambling networks.
The report focused particularly on MyStake, a crypto casino, though also mentioning Donbet, Goldenbet, Velobet, Cosmobet, Rolletto, FreshBet and Jackbit, and highlighted cryptocurrency as a significant problem for the regulated British betting space.
GAMRS’ report has labelled crypto as an enabler to the black market, with limited regulatory oversight – at least not yet – and little to no transparency around crypto transactions. This enables customers to make deposits to illegal offshore crypto casinos with banks, financial authorities or the Gambling Commission being unaware of what is going on.
For GAMRS, the use of cryptocurrency payment providers like CoinsPaid poses anti-money laundering challenges and enables cross-border movement of funds with little to no regulatory oversight.
The report also highlights fiat-to-crypto gateways such as MBRAMP, and integration of various crypto payments methods and infrastructure to illegal networks as an ongoing issue for UK regulated betting, one that is likely to get worse.
A regulated future for crypto betting?
As the Commission and others have observed, cryptocurrency adoption has been steadily rising across the UK – although as mentioned above it did fall from 12% in 2024 to 8% this year, perhaps due to people selling assets during a time of high living costs in the UK, or as a result of regulatory uncertainty.
Research routinely suggests that crypto ownership is concentrated among younger demographics, however, with between two-thirds to nearly 80% of crypto holders being under 45 years old. As younger consumers become the main economic players, crypto usage will likely become more normalised with this.
“The growth in cryptocurrencies amongst younger demographics means that there is a pressure building within the system,” Rhodes said in his CEO briefing last month.
“The reality is, in some years to come there will probably be a significant cohort of consumers who use cryptocurrencies because that is what they’re accustomed to. It is a demographic shift that will find they have no place in legitimate industry because of the currency they use.”
So, if younger crypto holders with an interaction in betting and gaming have ‘no place in legitimate industry’ because of the currency they use, logically they will turn to the unregulated sector. As a result, a regulated industry which will soon be squeezed by heavier taxation from April 2026 onwards will lose revenue.
Subsequently, the state – which clearly sees gambling as a lucrative taxation cash cow – will also lose revenue. And the players themselves will not benefit from the regulatory-mandated player protection measures in place, like newly adopted finance risk checks.
Regulation of crypto betting could be seen as the logical solution to this, and the UK may want to get a move on. Other markets have been making moves towards regulating crypto betting, with Estonia seeming particularly keen as the country looks to position itself as a new iGaming hub.
Other stakeholders are confident that the EU’s Markets in Crypto Assets (MiCA) regulation will provide an overarching framework for some nations to begin regulating crypto gaming. Betsson CEO, Jesper Svensson, shared this view at the SBC Summit Lisbon earlier this year.
“We are seeing regulation happening now, we have the MICA regulation in Europe for crypto,” he said. “It’s not standing still, and this gives some opportunities for companies, like our company, to tap into these areas.”
Regulating crypto gaming will not be a black-and-white process though. By its very nature, crypto carries anonymity – for many people this is why they hold and use it, and so establishing regulatory oversight over it won’t be clear cut.
For the time being, the UKGC is not making any commitments to regulate the sector. Both it and the wider industry will have to pay close attention to it next year though, especially if the exodus of players to the black market that the regulated industry has been predicting does occur.
Rhodes summarised the challenge ahead of the Commission in his briefing: “This is going to have to be government level discussion and it is a government level decision because once you open that door, you cannot close it.
“It brings questions around are you considering crypto as a source of wealth? Are you considering that as a source of funds? What conditions would you put in place? What are the risks and how do we manage that?
“But the reality is, and this growth in those demographics means, I don’t think governments can ignore that pattern.”