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  • J Huang and S Pettigrove

All crypto bets are off: Australia bans crypto payments to gambling sites

On 11 June 2024, the Australian government implemented a sweeping new ban on most regulated interactive gambling services (e.g. interactive wagering services) accepting digital currency and credit cards payments. The ban follows amendments to the Interactive Gambling Act 2001 (Act) enacted in December last year, which make it a criminal offence for interactive wagering services to accept credit card and digital currency payments punishable by criminal and civil penalties.

This means Australians will no longer be able to use their credit cards or digital currency (such as Bitcoin) to place bets online, as the government moves to tighten industry regulations to "stamp out harms" caused by gambling.

If an online gambling platform breaches the prohibition, it could face severe criminal or civil liabilities. They may also commit a separate offence in respect of each day during which the contravention continues, which could result in the imposition of significant cumulative penalties.

Furthermore, these offences do not require the interactive wagering service to be physically based in Australia - which basically means it has extraterritorial effect. The Act offers only limited defences to interactive wagering services.

The new amendments also pose risks to digital currency exchanges (DCEs). While the Act does not directly prohibit DCEs from facilitating digital currency payments to interactive wagering services, DCEs could become complicit in the commission of an offence by facilitating digital currency transfers to interactive wagering services (e.g. by dealing in the instrument or proceeds of crime). DCEs also risk breaching anti-money laundering and counter-terrorism financing (AML/CTF) obligations by facilitating crypto payments to interactive wagering services.

Crypto users are known to like a punt and in recent years there has been a proliferation of gambling websites which accept crypto payments. On 11 Janurary 2024, users of the betting platform Polymarket gambled USD$12 million on the outcome of Bitcoin Spot ETF approvals. Similar bets on ETH ETFs approvals reached USD$2.4 million in March.

Given the serious financial and reputational consequences of breaching criminal and AML/CTF laws, it is important for both online gambling services and DCEs to assess their payments offerings and identify steps to mitigate legal risks arising from the new prohibition on credit and crypto payments.

The genesis of the new prohibitions was the Parliamentary Joint Committee on Corporations and Financial Services’s 2021 inquiry into Regulation of the use of financial services such as credit cards and digital wallets for online gambling. The policy rationale for restricting the use of credit to gamble are well known and new restrictions on credit cards appear to be targeted at gaps in the existing law. The focus on digital currency payments appears to have come later with little by way of published policy analysis or debate supporting the ban. In any event, the prohibition on crypto payments is now law of the land Downunder for interactive wagering services, so all crypto bets are off for the foreseeable future.

Written by J Huang and S Pettigrove


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