Online gambling has been quickly overtaking traditional casinos ever since the invention of the World Wide Web – and has accelerated since smartphones. For residents of the Hawkeye State, it is a complicated legal picture around the use of digital currency in online gambling activities. As interest and holdings in the likes of Bitcoin continue to grow, more and more Iowans are asking whether or not crypto casinos are legal.
The current legal landscape in Iowa
It’s best to first understand the gambling laws more generally, like for fiat currency. In 2019, the state made headlines when it legalized sports betting. It meant that residents could finally place wagers on their favorite teams through state-licensed mobile apps. While some parts of Europe already had this legalization, it was a fairly forward-thinking move for a US state.
But, this was a legislation of sports wagering and daily fantasy sports, not real-money online casinos. Even today, operating an online casino that offers slots, poker, or table games is not authorized under state law – it’s a crime. There is no regulation in place to license/oversee online casinos, whether they’re fiat or crypto.
Offshore gaming
Because the state has not launched its own regulated iGaming market, players simply went looking elsewhere. Many offshore websites exist and are licensed in the likes of Gibraltar, Malta, Curacao, and so on. They accept players from all over the world and there’s little the Iowa authorities can do about it. It is a crime to use, but it’s proven difficult to enforce.
In fact, blockchain technology only made this easier as payments are even more borderless. Crypto casinos provide more anonymity and less friction, and so platforms like Razed Crypto Casino have blown up in terms of users (though this is in part due to generous crypto bonuses). They exist separately from the state-sanctioned system found within Iowa’s borders and are not legal in Iowa.
Why crypto is not yet accepted by the state
Online casinos are generally not allowed because of age-old arguments. This may soon chance, but crypto casinos specifically have less chance of legalization in Iowa because of the strict financial compliance required by local authorities.
State laws currently mandate that all regulated gambling transactions must occur in United States Dollars (so they can be tracked, taxed, and audited to prevent money laundering). Then there is KYC more generally, which crypto casinos somewhat rebel against. So, even if online casinos become legal and regulated in Iowa, it will likely not include crypto casinos.
The entity responsible for overseeing all legal forms of gambling is the Iowa Racing and Gaming Commission. The commission strictly monitors licensed land-based casinos and sportsbooks – they make sure casinos adhere to fair play standards. Does this mean that overseas casinos leave Iowans exposed to unfair standards? Not exactly, because overseas licensors have their own set of standards, many of which are fairly strict. But, it’s still a crime nonetheless.
Crypto casinos are not regulated in Iowa, but neither are online casinos. To fill this vacuum, overseas operators are picking up customers in Iowa, and many are crypto sites because of the frictionless nature of cross-border deposits and withdraws – as well as minimal KYC. This leaves Iowans responsible for their own well-being and the state regulator with a headache. Often, legalization is the best way to get back control over a situation, but this is unlikely to happen with crypto casinos because of their nature of being difficult to audit.
