Emma Hewins looks at the regulatory challenges presented by the emergence of crypto casinos.
“My ventures are not in one bottom trusted,
Nor to one place; nor is my whole estate
Upon the fortune of this present year:
Therefore my merchandise makes me not sad.”
William Shakespeare, The Merchant of Venice
Gambling has deep roots, but the modern casino emerged with Venice’s Ridotto in 1638 and evolved into a global industry offering both player-versus-player and house-banked games. Once associated with corruption and organised crime, a theme reflected in films like Casino (1995) and music such as 2 of Amerikaz Most Wanted (1996), gambling has since been domesticated through licensing, consumer-protection regimes, and financial oversight. Online casinos extended this regulatory bargain into the digital space, binding operators to national authorities such as the UK Gambling Commission and mechanisms like mandatory self-exclusion via GamStop.
Crypto casinos operate outside that settlement. Built on blockchain-based payment systems, pseudonymous wallets, offshore licences and VPN-enabled access, they bypass safeguards that underpin regulated markets, including identity verification, anti-money-laundering controls and effective player protection. Functioning as a borderless parallel ecosystem, they exploit the territorial limits of gambling law while drawing liquidity from jurisdictions that formally prohibit or tightly regulate them. As Shakespeare’s Antonio warns against trusting his fortunes to a single “bottom”, today’s gamblers face a different but related risk in navigating the volatile convergence of gambling and decentralised finance.
This article argues that crypto casinos do more than evade existing gambling regulation: they expose structural weaknesses across gambling law, financial regulation, and digital identity governance. By exploiting jurisdictional arbitrage, technological opacity, and fragmented enforcement, crypto casinos generate harms that contemporary regulatory frameworks were never designed to address.
Behavioural Risk as a Regulatory Blind Spot
Behavioural harm is not unique to crypto gambling, but crypto casinos intensify it in ways that strain existing safeguards. High-volatility assets, instant settlement, and 24-hour global access replicate—and often exceed—the risk dynamics of high-stakes online casinos. Former problem gamblers report using crypto platforms to chase losses, while surveys consistently show that crypto traders exhibit higher rates of gambling, gaming, and substance-use problems than traditional investors.
Despite this risk profile, research indicates that more than 70% of crypto casino operators lack basic consumer protections such as age verification, self-assessment tools[1], or effective self-exclusion mechanisms. This matters because problem gambling is disproportionately concentrated among younger users: around 6–9% of young people report gambling problems, compared with roughly 1% of adults[2], closely mirroring the demographic most active in crypto markets.
Influencer-driven marketing compounds the issue. Streamers and celebrities have promoted platforms such as Stake and Rollbit using voucher-based bonuses, “house money” framing, and live high-stakes play. Until recently, Twitch streamed crypto gambling content heavily to audiences aged 16–34. Critics, including influencers Pokimane and MoistCr1TiKaL, have warned that this content normalises extreme risk and misrepresents losses, particularly for underage viewers.
From a regulatory perspective, the key issue is not merely exposure, but where control is exercised. Traditional safer-gambling tools assume that risk mitigation happens at the operator level. Crypto gambling, by contrast, is promoted and normalised across global social platforms that sit largely outside gambling law, weakening the effectiveness of operator-led safeguards.
Offshore Licensing and Jurisdictional Arbitrage
The central regulatory loophole lies in licensing. Traditional online gambling is territorially regulated. In the UK, all licensed operators must participate in GamStop[3]; once a player self-excludes, no UK-licensed casino may accept them. Crypto casinos largely sit outside this structure.
Licensing is concentrated in offshore jurisdictions. Malta offers relatively stringent, EU-aligned oversight, while Curaçao has historically provided faster, cheaper licences with lighter enforcement, despite recent reforms. More than 20 small jurisdictions now offer online gambling licences, with Curaçao alone covering hundreds of brands. These regimes are attractive to crypto casinos precisely because they allow crypto payments, impose limited consumer-protection duties, and enable access to high-risk markets without meaningful local enforcement.
This creates regulatory arbitrage. A University of Bristol-linked study of 40 UK-accessible crypto casinos found that 92.5% allowed deposits without identity checks, and around half were reachable directly from the UK or via free VPNs. Because crypto wallets are pseudonymous, operators cannot cross-check users against GamStop’s register, allowing self-excluded players to resume gambling within minutes on offshore platforms with no legal obligation to honour their exclusion.
The result is a dual system: a heavily regulated, territorially bounded market alongside a decentralised, offshore shadow market. Regulators seeking to protect domestic consumers are forced to rely on indirect measures—advertising restrictions, payment blocking, and search-engine takedowns—rather than direct licensing leverage over the platforms their citizens actually use.
VPNs, Pseudonymity, and AML Loopholes
VPNs convert this structural separation into a practical loophole. They allow users to bypass geo-blocking and access prohibited casinos, with online forums offering detailed guides on gambling “undetected”[4] and lists of sites marketed explicitly as “not on GamStop”. In both the UK and US, using a VPN to place bets is not generally a criminal offence for players, creating a grey zone in which users circumvent territorial restrictions while operators claim compliance with their licensing jurisdiction.
Minimal identity checks exacerbate the problem. Underage and self-excluded users can deposit and gamble without friction, while payment processors may disguise gambling transactions under unrelated merchant codes or route them through white-label arrangements that obscure responsibility. These practices undermine core objectives of gambling law, financial regulation, and data protection, namely preventing relapse, protecting minors, and detecting fraud.
Cryptocurrencies intensify opacity. While Bitcoin and Ethereum are pseudonymous but technically traceable, users can obscure activity through mixers, privacy coins, chain-hopping, or multiple wallets[5]. Privacy-focused assets such as Monero conceal sender, receiver, and amount data entirely, making them attractive for illicit use[6] even where casinos do not list them directly. Users can convert in and out via external services before and after gambling.
AML frameworks struggle to adapt. Industry bodies warn that crypto casinos pose heightened risks of money laundering and terrorist financing when they operate with minimal Know Your Customer (KYC) controls and outside regulated banking rails. Regulatory pressure on specific assets—such as scrutiny of stablecoins under the EU’s Markets in Crypto-Assets (MiCA) regime—often leads operators simply to pivot to alternative tokens or payment methods, remaining one step ahead of jurisdiction-specific enforcement.
Enforcement Limits and Legal Workarounds
The challenge is not unique to crypto gambling. In Ivey v Genting Casinos, the UK Supreme Court held that “edge sorting” (looking for small differences in the design of the playing cards) amounted to cheating under the Gambling Act 2005, despite exploiting procedural weaknesses rather than overt rule breaking. The case illustrates how formal compliance can still undermine regulatory objectives.
Crypto casinos exhibit a similar pattern. Operators may comply with the rules of their licensing jurisdiction while designing products and marketing that defeat harm prevention elsewhere. Domestic regulators face hard limits. The UKGC can issue cease-and-desist notices, disrupt advertising, and request payment blocking, but these tools have limited effect on crypto-only casinos with no UK-facing banking relationships. The territorial scope of the Gambling Act constrains extra-territorial enforcement, forcing regulators to focus on intermediaries – affiliates, advertisers, app stores – rather than the platforms themselves.
Some jurisdictions are experimenting with broader approaches. The Netherlands’ CRUKS system is a centralised self-exclusion register linked to national digital identity. All licensed operators must check CRUKS on every login, and by mid-2025 more than 100,000 exclusions had been recorded. By mandating universal checks, the system reduces fragmentation and limits domestic circumvention, even if offshore sites remain accessible.
Technological solutions may also play a role. Decentralised identity systems and zero-knowledge proofs could enable privacy-preserving age and exclusion checks at the wallet level without disclosing personal data to each operator. While pilots exist in financial services, uptake in offshore-facing gambling remains limited. Without legal mandates, such as compulsory integration into exclusion registers or restrictions on advertising “not-on-GamStop” platforms, operators have little incentive to adopt technologies that constrain their user base.
Beyond Addiction: Fraud and Digital Exploitation
Loophole-driven regulation has enabled a broader ecosystem of harm. Fake casinos impersonate major brands to steal deposits; bonus schemes impose impossible withdrawal conditions; rigged games lack verifiable fairness; and deposit-only sites disappear after collecting funds. Phishing campaigns and malware-infected apps target wallet credentials, while data breaches at underground casinos show how even superficial compliance can generate fresh cyber risks when handled by unregulated operators[7].
These patterns mirror wider crypto-market abuses. Pump-and-dump schemes linked to influencer promotion exploit opaque governance and thin liquidity, allowing insiders to profit at followers’ expense. While not always directly tied to casinos, they reinforce an environment in which speculative tokens, gambling mechanics, and influencer marketing blur, complicating regulatory categorisation and enforcement.
Conclusion
Unlike traditional casinos, which rely on audits, exclusion tools, and direct regulatory oversight, crypto casinos exploit regulatory gaps, offshore structures, and pseudonymous currencies to bypass these safeguards and heighten risks of addiction, fraud, and money laundering. Returning to Shakespeare’s Merchant of Venice, although Antonio’s ships may have sunk, the lesson endures: risk must be spread across multiple thresholds. Applied to crypto gambling, this shows that outdated regulatory tools can no longer contain its complex, evolving threats. Closing the most damaging loopholes will require coordinated reform across offshore licensing, AML, crypto-specific gambling rules, universal exclusion mechanisms, digital identity systems, and platform-level controls on promotion. Only an identity-based, technologically adaptive, and globally coordinated framework can effectively contain the growing harms of the crypto casino shadow realm.
[1] Andrade, M., & Newall, P. W. S. (2023). Cryptocurrencies as Gamblified Financial Assets and Cryptocasinos: Novel Risks for a Public Health Approach to Gambling. The University of Bristol.(Accessed: 05 April 2025) Pg. 1-3
[2] D’Anastasio, Cecilia (2022). Twitch’s Gambling Boom Is Luring Gamers Into Crypto Casinos. Bloomberg UK. (Accessed: 28 May 2025)
[3] Gravel, David. (2025). UK warned over crypto casinos sidestepping GamStop safeguards. SiGMA World. (Accessed: 28 May 2025)
[4] Brown, Samuel H, (2022). Gambling on the Blockchain: How the Unlawful Internet Gambling Enforcement Act Has Opened the Door for Offshore Crypto Enforcement Act Has Opened the Door for Offshore Crypto Casinos. VANDERBILT. (Accessed: 05 April 2025) Pg. 543
[5] John, Beauden and Johnson, Mary Britney (2025). Blockchain Analytics and Crypto Forensics: Evaluating Technological Innovations in Tracing Illicit Financial Activity Across Public and Obfuscated Ledgers. ResearchGate. (Accessed: 12 June 2025) p. 3
[6] Murphy, Hannah (2021). Monero emerged as crypto of choice for cybercriminals. Financial Times. (Accessed 02 July 2025)
[7] Tashev, Tasho. (2025). 10 Dangerous Crypto Casino Scams. Webopedia. (Accessed: 02 July 2025)
Emma Hewins is passionate about technology and regulation and is currently studying the SQE at the University of Law, having previously completed a Music and Philosophy degree at Nottingham.
