“It’s clear from the draft framework that what they’re looking at is wagering using cryptocurrency,” said Julian Hoskins, the principle of gambling law and regulatory advisory firm Senet.
Australia’s Northern Territory Racing Commission (NTRC) is consulting with its gambling licensees over a tentative proposal to incorporate crypto wagering as part of the regulated gambling industry.
For the most part, gambling in Australia is regulated at the state level and not federally. The NTRC oversees all gambling and wagering companies that choose to be licensed in the Northern Territory (NT), including global wagering companies such as Betfair, Entain Group, Draft Kings and Sportsbet.
As it stands, the NTRC has sent a private document out to licensees, which seeks input and feedback on what the regulatory landscape could look like to get crypto wagering off the ground in the NT.
Julian Hoskins, the principle of one of Australia’s major gambling law and regulatory advisory firms Senet, has been given access to the private document and discussed with Cointelegraph what the NTRC is looking for at this stage:
“What it provides for is a licensee, say a sports bookmaker who holds a license in the Northern Territory, who wants to accept cryptocurrency for striking or paying out wages, [is that they] need to apply for consent to be able to do that. And there’s certain conditions that attach to that.”
“Now it’s clear from the draft framework that what they’re looking at is wagering using cryptocurrency, and not exchanging into fiat,” he added, noting that punters will most likely need to place fiat and crypto bets separately on the one platform, as the two financial tools won’t be interchangeable with each other for gambling.
While the prospect of such a move is hard to quantify at this stage, Hoskins stated that “given the popularity of crypto, I would imagine that this would be very popular as an alternative to fiat. I think it’s got the potential to be quite material.”
He added that if this model went according to plan in the Northern Territory, other state gambling regulators would likely follow.
Hoskins also noted that stringent identification requirements have also been proposed to keep in line with anti-money laundering (AML) regulations. As such gamblers will most likely need to have their crypto wallet addresses verified, and any winnings will need to be withdrawn “back to the same wallet” that made the initial deposit.
“What they’ll require under the draft framework is a verification of the crypto wallet. So it needs to be verified and registered against a customer’s identity. And the customer has got to prove that they control that wallet,” he said.
Hoskins also outlined that the NTRC has recommended monthly crypto deposit limits worth $2,000 AUD for the first 12 months, with a max wager of $5,000 AUD per month also.
The gambling-industry lawyer also explained that local gambling companies will be legally required to maintain crypto wallets that hold enough funds to fully collateralize customer wager amounts, as per the common practice in fiat-based gambling.
In terms of the tax implications of using volatile crypto assets to gamble, Hoskins said he didn’t know “how that would be treated,” suggesting the NTRC is still pondering such issues.
The NTRC appears to have changed its tune on crypto significantly, given that it previously ordered gambling firms such as Neds to “cease and desist” Bitcoin (BTC) wagering back in 2018.
Related: Australia’s new government finally signals its crypto regulation stance
Jamie Nettleton, Partner at Sydney-based commercial law firm Addisons, also spoke to Cointelegraph and emphasized the significance of the move from the NTRC.
“The NTRC consultation paper is the first indication by an Australian gambling regulator of a willingness to consider the use of cryptocurrency,” he said, adding that:
“To date, any Australian wishing to utilize crypto in gambling must do so overseas with a party likely to do so illegally ( at least from the perspective of Australian gambling law.). This paper is a welcome change!”
This comes just a couple of days after the recently elected Australian Labor Party (ALP) finally announced an approach to crypto regulation. Treasurer Jim Chalmers announced a “token mapping” exercise that is expected to help “identify how crypto assets and related services should be regulated.”