Regulating the future: UK crypto gambling insights and their Australian implications
At the recent Backing The Punt Conference hosted by Senet, there was considerable discussion about the continued, albeit difficult to measure, growth in Australian participation in offshore-hosted online gambling and the drivers behind it. An interesting aspect of the conversation was the role that cryptocurrency as a payment method on offshore-hosted platforms plays as one of a number of regulatory differentiators behind this trend.
The role of crypto and digital currencies within the gambling industry has presented a difficult policy dilemma for governments and regulators to date, but the growth and scale of crypto adoption is creating pressure for a response.
As in Australia where wagering service providers have been prohibited from accepting payment in digital currencies following amendments to the Interactive Gambling Act 2001 (Cth), cryptocurrency is similarly not a permitted form of payment for online gambling operators licensed by the UK Gambling Commission.
In that context, it was interesting to note that Andrew Rhodes, the Chief Executive Officer of the UK Gambling Commission, used his keynote address at the recent International Association of Gaming Regulators (IAGR) 2025 Conference to canvass a range of topical regulatory issues, from player protection and affordability checks to digital transformation and the influence of technology on gambling behaviour. Mr Rhodes spent some time discussing the emergence of cryptocurrency within daily life, the consumer demand to utilise it for gambling purposes and the inevitable and increasingly pressing need to develop a government policy response to the issue.
Since any moves to evolve the policy position in the UK could influence local policy and expectations, we have set out below some observations from Mr Rhodes’ address and previous regulatory commentary on the issue.
The growing digital shift and crypto acceptance
Mr Rhodes noted that in the UK, cryptocurrency is increasingly being utilised by demographics under 40 and, for many, crypto assets are more dominant than fiat currency or fiat-based assets. In the absence of regulatory reform, there will, therefore, be a generational cohort who currently do not have a space in the legitimate market to transact in their preferred means unless the regulatory environment is amended to accommodate crypto and other forms of digital payment.
The regulatory risks of cryptocurrency
Although offshore wagering presents well-publicised risks and financial impacts for consumers and authorities alike, so too does crypto and digital currency gambling regulation present its own challenges.
In particular, Mr Rhodes cautioned that gambling regulators must remain alert to issues surrounding “traceability of funds, AML risks, and terrorist financing.” His remarks align closely with the considerations previously raised by the UK Gambling Commission and considered by Australian gambling regulators in previous years, which include:
Price volatility: As the common crypto coins like Bitcoin and Ethereum are unpegged tokens, they are susceptible to unpredictable and dramatic price fluctuations which can distort both player outcomes and operator liabilities.
Customer identification and source-of-funds verification: With cryptocurrencies working on a pseudonymous decentralised blockchain, the system directly challenges the effectiveness of current AML/CTF frameworks which rely on identification and will need substantial amendments to address crypto’s unique nature.
Scalability and transaction costs: Cryptocurrencies such as Bitcoin and Ethereum are often limited by high and volatile transaction fees that fluctuate with user demand. When network activity surges, transaction processing slows, leading to delays and reduced efficiency. This will be a critical operational consideration for gambling operators which conduct high frequency or tranche-based transactions as they will need to rely on the ability of a blockchain network to scale without compromising speed or cost-efficiency.
Protection of customer funds: Typically, customer coins are held by crypto exchanges or custodians but, with the volatility of crypto ever-present, these institutions may be subject to solvency and other issues (as seen in the FTX collapse and which has, in part, prompted the Australian government to recently propose licensing of digital currency exchanges and other reforms in this space).
Open-loop risks: The Commission identifying the risks that permitting withdrawals into different accounts breaks the audit chain and creates a mixing effect which presents serious money laundering risks.
These are some of the issues which highlight why the UK Gambling Commission and Australian regulators have so far approached cryptocurrency with caution. The challenge is to craft proportionate regulation that mitigates these risks without forcing legitimate innovation into the unregulated sector.
Mr Rhodes has called for a governmental response to the issue and highlighted that it will not be tenable to continue the status quo. We agree with these sentiments. The Federal government’s recent consultation on proposed reforms to the regulation of crypto-asset related services and platforms from a financial regulation perspective is a welcome step towards understanding the risks and opportunities associated with these technologies. We would encourage government to critically assess the role of crypto-assets in the gambling sphere if Australia is to balance responsible gambling and AML/CTF integrity considerations with innovation and consumer demands.
About Senet
Senet is a multidisciplinary Australian firm specialising in gambling and gaming law, regulatory compliance, and business advisory services. We are the largest specialist team in Australia and based in Victoria. Our team is deeply immersed in the industry, often sharing insights at public speaking events, and our principals have held executive roles in a global ASX-listed entity and a 'Big Four' advisory firm, giving us a unique perspective on the challenges our clients face.
If you have any questions or would like to discuss the topics covered in this article, please contact the team at Senet.
