DraftKings is getting ready to introduce a brand new method for patrons in a number of U.S. states to fund on-line sports activities betting accounts, permitting cryptocurrency to be transformed into money earlier than being deposited. The rollout, mentioned publicly throughout a latest Massachusetts Gaming Commission assembly, highlights how state regulators proceed to take totally different approaches to digital forex use in regulated wagering.
At the assembly, Chief of the Division of Sports Wagering Carrie Torrisi informed commissioners that DraftKings plans to launch the brand new deposit choice in 4 states within the coming weeks. Commission Chair Jordan Maynard recognized these jurisdictions as Illinois, Kentucky, New Hampshire, and Vermont. While the function entails cryptocurrency, DraftKings emphasised that it doesn’t contain straight accepting crypto for wagers. Instead, digital belongings can be transformed into U.S. dollars earlier than coming into a sportsbook account.
States Diverge on Crypto Acceptance
Regulatory positions on cryptocurrency differ extensively throughout the United States. Some jurisdictions have been open to its use in regulated sports activities betting, whereas others stay cautious. Wyoming was among the many first to permit cryptocurrency as a funding technique in 2021. Colorado and Virginia adopted in 2022 by allowing crypto conversions for sportsbook deposits, reasonably than direct acceptance.
Kentucky regulators confirmed that their guidelines already accommodate such funding strategies. “Kentucky’s sports wagering regulations directly contemplate the use of digital, crypto and virtual currencies,” Kentucky Horse Racing & Gaming Corporation Director of Sports Wagering Hannah Simms stated. “Sports wagers may be made using forms of payment approved by Kentucky Horse Racing & Gaming including ‘cash equivalents converted to cash.’ The definition of ‘cash equivalent’ includes ‘digital, crypto and virtual currencies.’”
Simms added that regulators carried out a full evaluate earlier than approving the DraftKings proposal. “KHRG staff worked with DraftKings to evaluate their proposal. This included a full product walkthrough, review of any vendors involved and confirmation that the system underwent appropriate testing. Following that process, KHRG approved the method for use in Kentucky as it satisfies our regulatory requirements.”
Vermont officers echoed that place. Hannah Chauvin, director of communications and authorized affairs on the Vermont Department of Liquor and Lottery, stated the company defines crypto and digital currencies as money equivalents and permits their use to fund sports activities wagering accounts.
Massachusetts was initially anticipated to be a part of the take a look at group however reversed course late final yr. Following a regulatory evaluate, the state up to date its guidelines to prohibit crypto transformed to money as a funding supply for sports activities betting accounts, efficient December 19. The restriction mirrors the state’s ban on bank cards and applies even when transformed crypto originates from one other jurisdiction.
At a December assembly, regulators raised issues about oversight and monetary dangers tied to digital belongings. “We believe, basically, crypto is not ready for primetime,” stated Caitlin Monahan, director of the Massachusetts Gaming Commission’s Investigations and Enforcement Bureau, according to SBC Americas. “We really don’t think at this moment in time, in this regulatory structure, it is a funding source that is ready to be incorporated and that we want to be encouraging.”
Monahan pointed to restricted regulatory controls and the potential for cash laundering as key points. She additionally famous that not one of the state’s licensed sportsbooks had been providing crypto-to-cash deposits on the time. DraftKings Legal Director Pete Harrington clarified through the assembly that the corporate was not looking for to settle for cryptocurrency straight, however reasonably to discover the usage of transformed digital belongings beneath regulatory oversight.
Credit Cards, Crypto, and Shifting Payment Rules
The crypto-to-cash rollout comes months after DraftKings stopped accepting bank cards for sports activities betting deposits. Credit card restrictions are actually widespread throughout the U.S., with bans or limits in states together with Illinois, Iowa, Massachusetts, New Hampshire, Rhode Island, Tennessee, and Vermont. Virginia lawmakers just lately handed related laws.
Illinois regulators confirmed that their guidelines permit crypto conversion beneath particular circumstances. Illinois Gaming Board Director of Communications Beth Kaufman stated sportsbooks within the state can not straight settle for cryptocurrency, however might settle for funds transformed into U.S. {dollars} via cash transmitters licensed by the Illinois Department of Professional Regulation.
DraftKings continues to supply different deposit choices, together with debit playing cards, Apple Pay, bank wires, and money deposits at choose retail areas. The firm has beforehand signaled curiosity in cryptocurrency as a funding device, whereas acknowledging regulatory resistance. Wyoming stays the one state the place sportsbooks can straight settle for crypto.
For prospects, changing cryptocurrency to money carries tax penalties. Each conversion triggers a taxable occasion beneath federal regulation. “When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses,” in accordance to the IRS.
Short-term capital positive aspects on cryptocurrencies will be taxed at charges starting from 10% to 37%, whereas long-term positive aspects are taxed at charges up to 20%. As DraftKings prepares to roll out the function, bettors in taking part states will want to contemplate these obligations alongside the comfort of utilizing digital belongings to fund wagers.
