Crypto gambling is an innovation that has no boundaries and has already managed to cover the majority of countries around the world. While its popularity may not be the same as gambling with fiat money, still a lot of people are gradually moving to betting with Bitcoin and other cryptocurrencies.
As exciting as it may seem to gamble with digital coins, we should point out that crypto gambling has several characteristics one of which is its taxation system. In some countries, taxes on winnings are introduced, as well as there are separate payments for maintaining the business. In this article, we will talk about the nature of taxation of Bitcoin and how they are incorporated into practice.
How Taxes are Calculated?
We should point out that taxes on winnings vary from country to country. For example in big countries such as India, the United States or the United Kingdom players might be offered different conditions than in smaller countries. There is no single rule, that would be the same for all states and because of that, there are different methods for calculating additional charges for winnings. As Bitcoin is becoming legal tender in numerous states, the world’s largest cryptocurrency also gets the same taxation as other assets.
First, we should start with relatively smaller countries and find out how taxes are adopted on winnings. The first ones that certainly come to our mind are Malta, Hong Kong and Portugal.
Malta is generally considered a gambling haven both for players and owners of online casinos. At the same time, the state manages to maintain its status as one of the friendliest crypto countries when it comes to betting and trading. With that being said, Malta does not apply taxes for holding Bitcoin and the same applies to gambling. Even if you manage to claim winnings from various cryptocurrencies you do not have to worry about taxes too much, because Malta makes sure players have the best possible conditions.
Portugal is also one of the best countries when we talk about betting with crypto. First of all, the country has decent laws regarding Bitcoin gambling and individuals have been tax-free since 2018. For the most part, when you manage to grab winnings in Portugal, you will not be taxed by the country notably.
Hong Kong is an interesting country. The state, which has long-term problems with China, is a perfect place for players. If you are not running a business or owning an online casino, from a gambler’s perspective it is a decent location. First of all, if you win a large amount of money inside the country, you will not be subject to taxation, let alone the laws that are particularly tailored to players.
When we talk about big countries on our list, of course, we should be mentioning the United States, the United Kingdom and India. These are the countries, where the taxation system could seem complicated at first, but we will explain step by step below.
The United States is a huge country with 50 states. It is a federal country where each state has its own legislation, laws and system of government. Because of that, crypto taxes are different from each other. In most cases, you will be taxed 20% on your winnings and if these winnings are larger, then most likely the taxation will rise too. The volatility of Bitcoin also plays a role. Imagine if you win $10,000 in Bitcoin and at the time of withdrawal it is $15,000 there could be some adjustments from the country’s side. It is generally a good idea to check this information in advance with a respective crypto casino and representative, who has expertise in the crypto gambling industry.
There are states in the United States where gambling – both in traditional and crypto form are prohibited. This is something you also need to consider before you decide to start betting on a sportsbook’s website. Overall, the average taxation is 20% for your winnings, but this rate could vary slightly.
Like the United States, India is also a federal country with different states. The Asian superpower has had a long history of confrontation with cryptocurrencies. At some point, the government was thinking of banning them including trading, but right now the situation seems to be changing. In some states, crypto betting and gambling is completely prohibited, but in states where it is allowed the government takes a certain percentage of winnings. Hence if you are looking forward to making some money on Indian sportsbooks, make sure you have information about all peculiarities of taxation.
In the United Kingdom, taxes are set for owners of crypto casinos after they reach a certain threshold of winnings. As for individuals, they are not liable for paying additional taxes for winnings. Individuals are only liable for income tax for cryptocurrency that they receive via mining, airdrop, and confirmation rewards as well as crypto received as salary from an employer. When it comes to winnings from gambling then there are practically no restrictions.
Why It is Difficult to Regulate Cryptocurrencies?
Bitcoin or any other cryptocurrency is hard to regulate because there is no single agreement in different countries. Various states have various rules when it comes to digital coins and yet it is difficult to find a compromise. The nature of Bitcoin is so complicated that even after 13 years of being emerged in the financial industry, numerous attempts have been foiled to somehow regulate BTC. With betting everything is even more difficult. While some countries mentioned in our article have some taxes on winnings, there are ones, those completely free players from such taxes. Overall, before you decide to sign up on a specific crypto sportsbook make sure that you know all the laws in advance and only then move to betting.