David Clifton is quoted in a Gambling Compliance article (that can be downloaded below) commenting on the grant by the Isle of Man Gambling Supervision Commission to eSports fantasy league and betting site ESP.bet of its first virtual good and currencies licence.
David comments that, in his view, the major hurdle that will have had to be overcome will have been that related to anti-money laundering (“AML”) and combating the financing of terrorism (“CFT”) controls, but the GSC has made life easier in this respect by coming up with its own AML/CFT Guidance for Virtual Currencies, also downloadable below.
The UK Gambling Commission has certainly not closed the door to licensing operators accepting virtual currencies as a means of payment, but it is still warning about:
- the degree of anonymity associated with digital currencies may be attractive to individuals who want to conceal their identity and/or the source of their funds,
- there is no central authority that supports the value of digital currency – for example, Bitcoin has a history of large price fluctuations and
- there is a history of hacking, theft and other criminal activity associated with digital currencies.
and continuing to assess whether virtual currencies create greater:
- problem gambling-type risks (ie people spending too much time and money),
- transitional risks (increased participation in real money gambling, especially in relation to young people) and
- consumer protection-type risks (for example, people falling victim to scams).
The advantage the GSC has over the Gambling Commission it its ability to move quickly and achieve first-mover advantage, which it seems to have done most effectively with news of the grant of the licence to ESP.bet.
As David comments in the Gambling Compliance article, time will tell whether both the GSC and, more importantly, those it licenses in a similar manner to ESP.bet have sufficiently robust controls in place to avoid the sort of AML/CFT failings that have landed so many operators licensed by the Gambling Commission in hot water in recent years.