This article will explore the legal implications of gambling using NFTs and metaverse casinos.
Metaverse Gambling — Outlook
This unprecedented level of interaction forever changes the online gambling world, and one of its central tenets is cryptocurrencies. Namely, while traditional online casinos and sports betting sites accept both fiat and cryptocurrencies, in the metaverse, the entire gambling experience is connected to cryptos. As a user, you can exchange your fiat currencies for cryptocurrencies used in the metaverse and make deposits via your crypto wallets, but not the other way around.
Most recently, both traditional online casinos and those operating in the metaverse have started implementing NFTs into their everyday operations primarily because of their incredible versatility.
Gambling With NFTs
However, first and foremost, online casinos are using NFTs as a substitute for traditional cash prizes. When you place a bet of any kind and win, your prize can be an NFT. This implies that you can stake NFTs as well.
Another shining example of NFT usage in online casinos is BC.Game, one of the most popular NFT casinos in the world. The platform hosts over 3 million users who have placed more than 10 billion bets in the past three years on the 5,000+ games available in the library. The casino recently released the so-called Degenverse network, hosting the Degen Pass NFT.
The Degen Pass is an NFT consisting of a collection of 1777 genesis passes on the Ethereum blockchain that will serve as an entry to the casino and decentralised gambling apps.
Online casinos are also relying on NFTs to reward players for their loyalty. When players score big wins or play for longer, a casino may reward them with NFTs.
Legal Considerations With NFTs and Gambling
Given that NFT can be freely traded on a third-party secondary market and won as a result of play, they certainly fall under the category of “thing of value” staked, which is at the very core of any definition of betting. As such, NFT gambling in the metaverse must abide by the rules in the dedicated framework.
In addition, since NFTs are acknowledged as financial instruments (crypto assets), they are subject to Anti-Money Laundering regulations. A study published by the U.S. Department of the Treasury deems the emergence of NFTs a security risk. This notion is widely applicable to NFTs in the form of artwork that a casino may give its users as a loyalty bonus.
Ownership or License Rights are also critical issues with NFTs in general and applicable in the gambling sphere. Namely, it should be clearly stated by the casino’s terms of use that the buyer of an NFT has the sole rights to the asset represented by it, as well as the range of those rights, whether they are broad commercialisation or non-commercial rights. This warrants a change in the casino’s Terms and Conditions page.
NFT Casino Projects and Securities Violations
Such occurrences warrant a more comprehensive regulation of blue-chip NFT collections and a broader application of NFTs in the casino industry.
How Will Operators Respond to Legal Obstacles Regarding NFTs and the Metaverse?
On the other hand, only a few countries and states have been willing to make the necessary changes in their sports betting and online casino laws. We have the case of Wyoming, which became the first US state to allow legal sportsbooks to accept “digital, crypto and virtual currencies.” However, that’s too few to make the gambling juggernauts invest their time and resources into winning over the market.
Although there are legal impediments, companies are preparing for a wider application of the metaverse and the opportunities that arise for casinos. However, due caution is needed to navigate through the underdeveloped legal and regulatory framework.
