Australia’s Northern Territory is considering landmark crypto-gambling regulations

Australia’s Northern Territory Racing Commission (NTRC) is consulting with its gambling licensees on a preliminary proposal to incorporate crypto gaming as part of the regulated gambling industry.

For the most part, gambling in Australia is regulated at the state level and not federally. The NTRC oversees all gambling and betting companies that choose to be licensed in the Northern Territory (NT), including global gaming companies such as Betfair, Entain Group, Draft Kings and Sportsbet.

As it is, the NTRC has sent out a private document to licensees, seeking input and feedback on what the regulatory landscape might look like to get investment in crypto off the ground in the NT.

Julian Hoskins, the principle of one of Australia’s major gambling law and regulatory advisory firms Senet, has obtained access to the private document and discussed with Cointelegraph what the NTRC is looking for at this stage:

“What it provides is a licensee,” says a Northern Territory-licensed sports bookmaker, who wants to accept cryptocurrency to strike or pay wages, [is that they] must apply for consent in order to do so. And there are certain conditions connected to that.”

“Now it’s clear from the draft framework that what they’re looking at is betting with cryptocurrency, and not switching to fiat,” he added, noting that punters will most likely need to place fiat and crypto bets separately on it one platform, as the two financial tools will not be interchangeable with each other for gambling.

While the prospects of such a move are difficult to quantify at this stage, Hoskins stated that “given the popularity of crypto, I would imagine this would be very popular as an alternative to fiat. I think it has the potential to be quite material.”

He added that if this model went to plan in the Northern Territory, other state gambling regulators were likely to follow suit.

Hoskins also noted that strict identification requirements have also been proposed to stay in line with anti-money laundering (AML) regulations. As such, players will most likely need to have their crypto wallet addresses verified and any winnings will need to be withdrawn “back to the same wallet” that made the initial deposit.

“What they will require under the draft framework is a verification of the crypto wallet. So it has to be verified and registered against a customer’s identity. And the customer has to prove that they control that wallet,” he said.

Hoskins also outlined that the NTRC has recommended monthly crypto deposit limits worth $2,000 AUD for the first 12 months, with a max stake of $5,000 AUD per month as well.

The gambling industry lawyer also explained that local gambling companies will be legally required to maintain crypto wallets that have enough funds to secure customers’ stakes, as per common practice in fiat-based gambling.

As for the tax implications of using volatile crypto-assets to gamble, Hoskins said he did not know “how it would be treated,” suggesting the NTRC is still considering such issues.

The NTRC appears to have changed its tune on crypto significantly, given that it previously ordered gambling firms such as Neds to “cease and desist” Bitcoin (BTC) betting back in 2018.

Related: Australia’s new government is finally signaling its stance on crypto regulation

Jamie Nettleton, partner at Sydney-based commercial law firm Addisons, also spoke to Cointelegraph and emphasized the significance of the move from NTRC.

“The NTRC consultation paper is the first indication from an Australian gambling regulator of a willingness to consider the use of cryptocurrency,” he said, adding:

“To date, any Australian who wants to use crypto in gambling has to do so overseas with a party who is likely to do so illegally (at least from the perspective of Australian gambling laws.). This paper is a welcome change!”

This comes just a couple of days after the recently elected Australian Labor Party (ALP) finally announced an approach to crypto regulation. Treasurer Jim Chalmers announced a “token mapping” exercise expected to help “identify how cryptoassets and related services should be regulated.”