Australia’s Northern Territory Considers Groundbreaking Crypto Gambling Regulation

According to Julian Hoskins, the founder of the gaming law and regulatory advice business Senet, “it’s evident from the draft framework that what they (Australia) are looking at is wagering using cryptocurrencies.”

A potential proposal to include crypto wagering as a component of the regulated gambling sector is now being discussed by Australia’s Northern Territory Racing Commission (NTRC) with its gambling licensees.

The majority of Australian gambling laws are state-level, not federal, in nature. All gaming and wagering businesses that opt to obtain a license in the Northern Territory (NT) are governed by the NTRC, including major international betting firms like Betfair, Entain Group, Draft Kings, and Sportsbet.

As it stands, the NTRC has sent a confidential paper to licensees asking for feedback on how the regulatory environment may look to start crypto wagering in the NT.

With access to the confidential document, Julian Hoskins, the founder of Senet, one of Australia’s leading gaming legal and regulatory advice organizations, made comments in a recent interview about what the NTRC is currently seeking:

What it says is that if a licensee—for example, a sports bookmaker with a license in the Northern Territory—wants to accept cryptocurrencies for making bets or paying out salaries, they must first ask for permission to do so. And there are some restrictions that go along with that.

He continued, “Now it’s clear from the draft framework that what they’re looking at is wagering using cryptocurrency, and not exchanging into fiat.” Punters will likely need to place fiat and cryptocurrency bets separately on one platform, as the two financial instruments won’t be interchangeable with each other for gambling, he said.

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Hoskins said that “given the popularity of crypto, I would assume that this would be very popular as an alternative to fiat,” even though it is difficult to put a number on the possibility of such a move at this time. It might be very influential, in my opinion.

He continued by saying that other state gaming regulators would probably follow if the Northern Territory’s implementation of this strategy proceeded as planned.

Hoskins further mentioned that in order to comply with Anti-Money Laundering (AML) rules, strict identification procedures have also been proposed. As a result, players’ cryptocurrency wallet addresses will probably need to be validated, and wins must be transferred “back to the same wallet” that made the initial payment.

“A crypto wallet verification is what they’ll need, under the draft framework. Therefore, it needs to be checked against a customer’s identification and registered. And the client has to demonstrate that they are in charge of that wallet,” he said.

Hoskins further stated that for the first 12 months, the NTRC has suggested monthly cryptocurrency deposit limits of 2,000 Australian dollars, or roughly $1,300, with a maximum wager of 5,000 Australian dollars, or roughly $3,500, every month.

A local gambling company’s legal obligation to keep cryptocurrency wallets with sufficient assets to completely collateralize customer wager amounts, as is customary in fiat-based gambling, was also described by the lawyer for the gambling sector.

Hoskins stated that he was unsure of “how it would be addressed” in regards to the tax repercussions of utilizing volatile crypto assets for gambling, indicating that the NTRC of Australia is currently considering these matters.

Given that it earlier instructed gaming companies like Neds to “stop and desist” Bitcoin (BTC) wagering back in 2018, the NTRC appears to have dramatically revised its position on cryptocurrency.

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The importance of the departure from the NTRC was underscored in a recent interview  with Jamie Nettleton, a partner at the Sydney-based business law firm Addisons.

He said that: “The NTRC consultation paper is the first signal by an Australian gambling regulator that they are willing to investigate the usage of cryptocurrencies.”

To date, Australians who want to use cryptocurrency for gaming must do so abroad with a party that is probably going to do it illegally ( at least from the perspective of Australian gambling law.). This paper is a nice change of pace!

Earlier this week, the newly elected Australian Labor Party (ALP) officially unveiled its strategy for cryptocurrency regulation. A “token mapping” project was launched by Treasurer Jim Chalmers, and it is meant to “determine how crypto assets and related services could be regulated.”

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