Changes in European regulations may impact Bitcoin
Some researches were stating that nearly a half of the bitcoin transaction is somehow related to various gambling activities. The reasons behind this are quite simple, the bitcoin provides a greater anonymity for the players and low transaction costs. However, the popularity of the bitcoin in the iGaming sector seem to become even greater this year.
Considering the fact that Poland, the Netherlands, Czech Republic and a few other major European markets are making it unfavourable for the operators to serve the customers via a locally regulated company and illegal to operate without one, the bitcoin casinos may become the best possible substitution in such markets. You may already see some of the popular Bitcoin casinos being listed at the various rating websites. While these websites are still listed in the bitcoin category, BTC casinos may soon take the largest slice of the market share. Let’s check a few European countries one by one to see the possible arguments.
Over 250 domains are banned in Poland
Polish government has set a deadline to ban all of the domains of the unregulated gambling companies by the 1st of July 2017. Now over 30 days have passed since then and we can conclude that this practice has been quite effective in terms of cleaning up the Polish market. Until now, it was announced that such gambling giants as 888 casino and poker, Pinnacle betting, Bet365, William Hill and other well known betting and casino operators have stepped out from Poland. Historically, some of the countries were putting such harsh restrictions on the gambling operators that only the richest ones could stay, yet this is not the case in Poland. The government has simply put a very high tax rate (12% on turnover), which already makes it quite risky for any gambling company to operate. And as a cherry on top, the Polish Ministry of Finance requires a company to apply for the local license with its locally established entity that employs local staff too. As a result, only a few unregulated operators are continuing serving the Polish players by offering their services while some subdomains.
We can clearly see an opportunity here for the bitcoin. While the number of competitors have decreased dramatically, generating profits is still not so easy for the locally regulated companies. Also, regulated companies are less likely to compensate their affiliates well or even at all. This is where bitcoin casinos and betting operators may take action and serve Polish customers with having no fears of being blocked by the payment system provider.
Czech Republic taxes the highest
Similar to Poland, Czech Republic has introduced a way to the gambling operators to get regulated and has required Internet Service Providers to ban the IPs of the unregulated entities. Instead of taxing the turnover, Czech Republic has decided to implement two types of taxation. Firstly, each of the games that uses randomly generated way of identifying a winner will be taxed at the 35% from the grosh gaming revenue. Even though such a tax rate is already one of the highest in Europe, Czech authorities will still charge a 19% income tax on top of that.
Again, most of the online gambling operators have decided to quit their operations. Needless to say, the bitcoin casinos and betting companies will be able to serve the clients in Czech republic without any local regulation, and this way they could save up quite a lot when compared to the regulated companies.
Summing it up
The EU governments are looking into tightening the screws in the iGaming sector. Ultimately, the government has two preventing measures in its disposal: blocking the operator’s IP address and requiring the payment systems to block the operator’s accounts. While the first block can be easily bypassed by various subdomains, avoiding the block on the deposits may be very challenging for the gambling companies that use fiat currencies. However, the bitcoin here seems to be the ultimately answer, and such a large forecasted demand on the cryptocurrencies may send the Bitcoin to the new heights.
Author: Nick James
Alan Zibluk – Markethive Founding Member