Online gambling operators are drawn to Bitcoin because of its immediate and irreversible transactions, which eliminate the risk of charge back fraud. Bitcoin being its own payment processor eliminates the anxiety associated with deposit and withdrawal delays making it appealing for customers, especially in the USA, as there are no bank wires or e-processing hassles.
PBS publication reports that more than half of global Bitcoin transactions are wagers on internet gambling sites although the versatility of this internet currency is applied in many different sectors.
The best example is Erik Voorhees a founder of a popular Bitcoin gambling site, which he then sold to an anonymous buyer a year later for 126,315 Bitcoins - then worth around $12.4 million rising to an amazing $70 million due to ups and downs in the informal market.
Big betters are attracted by Bitcoins anonymity, PBS reports; one gambler dropped an equivalent of almost a million dollars on a popular gambling Bitcoin site which was watched by international railbirds on the blockchain, Bitcoin’s registered public ledger.
“The whale's transactions were anonymous, but as public as a scoreboard at a high-school football game,” PBS notes, reporting that this popular site has handled the equivalent of more than $2 billion in wagers since it was founded in June 2013.
PBS points out that the rise of Bitcoin has occurred over a relatively short period, putting the regulators in a struggle to understand this virtual currency. US experts are questioning the legality of Bitcoin wagering but to date had not taken any overt action against the use of Bitcoin in this way.
Some popular Bitcoin gambling web sites are trying to block US players in an attempt to minimize risk even though there isn’t any official action, which is why Voorhees sold the enterprise in anticipation of US government legal action.
In the US, federal government doesn’t have a say in online gambling as that is up to each individual state and none of those have laws specifically banning Bitcoin, notes PBS
"The clearest anti-gambling laws regulate payment processors that would funnel winnings from the operators to the betters. But Bitcoin is a decentralized payment processing system. So there’s no person or organization to prosecute,” PBS points out.
Prof. I. Nelson Rose a learned online gambling legal expert stated in PBS publication that even if Bitcoin could be regulated, Bitcoin – or the various organizations that speak for it - could argue that they’re just like the U.S. Treasury - separate from the activities people use Bitcoins for
“If it’s not money, it’s not gambling,” claims Rose.
PBS concludes that the chair of the Federal Reserve, Janet Yellen, doesn’t have any authority to regulate the virtual currency in spite of the recent bankruptcy of the Mt. Gox.
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