Special thanks to @pathforger for the comment on my introduction post that inspired this post!
Cryptocurrency in Washington State is in a legal grey area. I've heard of bank accounts being frozen for taking payments from cryptocurrency sales. Many cryptoexchanges say in their terms of service that they are illegal to use in Washington State, in general we seem to be lagging behind in cryptocurrency adoption even within the USA. Recently Washington State passed a law to require cryptoexchanges to be locally licensed which seems like it will slow down cryptocurrency adoption in the state for some time. My suspicion of casinos being partly involved is purely speculative, but there are a couple reasons I think they'd like to slow the adoption of cryptocurrencies, especially since the industry influences local monetary policy in other ways already.
First we need a little background about casinos and relevant laws in my state. Washington State has always been strict about physical gambling laws, though gambling is legal and casinos are prominent even if the industry is tightly regulated. Online gambling has seen much more scrutiny and is in a very grey area of legality. In recent years though the shift of focus on prosecuting online gambling has switched from the gamblers to the site operators so many sites simply choose not to operate in this grey area, though some do exist and some even use bitcoin. In addition the State requires an Money Transfer/Currency Exchange license for any business offering online money transfers. This requirement extends to business like Paypal, and online banking for mainstream US banks such as Bank of America and has existed for some time, though I think banks may contract out to other businesses who have licenses instead, such as ClearXChange (a money sending service and popular payment method on the p2p exchange Bitsqaure) which is becoming Zelle (another online money sending service already adopted by several major banks) but thats a whole other post. Recently legislation was introduced to expand the definition of currency for those licenses to include virtual currency, which they defined as “a digital representation of value used as a medium of exchange, a unit of account, or a store of value, but does not have legal tender status as recognized by the United States government.”. So now any cryptoexchange wishing to do business in Washington State must acquire one of these licenses. General requirements for these licenses can be found here, but may include criminal background checks of all the following members of the business: the "applicant, executive officers, proposed responsible individual, board directors, AML compliance officers, or other person in control". Needless to say that, along with all other the requirements is enough to make the license and entry into what is not a particularly large market feel like its not worth the effort for these businesses. Not to mention that as far as I know these licenses do not apply to other states that have similar laws.
Now that I explained the background I can get to why I think casinos might want to slow the adoption of cryptocurrency. One of the first websites I came across while I was searching for things to do with my Gridcoins was https://www.crypto-games.net/, A cryptogambling website. I was immediately interested and made an account only to realize when 3/4 of the way through reading the terms of service (yes I actually do that) that the terms prohibit use in Washington State. I was disappointed but I was still curious so I stuck around the site and learned more about it. One of the things that stuck out at me was that all of the games on crypto-games are "provably fair" which is to say that all the code can be reviewed by any one, I put fair in quotes because as far as I remember the house still has a statistical advantage of about 1-3% depending on the game. This right here is the biggest thing that makes me think that Casinos wouldn't want cryptocurrency to be widely used. That level of transparency provided by “provable fairness” sets an expectation that I don't think Casinos are currently comfortable with. Its hard to measure fairness in physical games as physics introduces imperfections into the statistics and physical game rigging and cheating is possible. So we'll use slot machines for example. Nowadays there are very few if any mechanical tumbler slot machines left in use and slot machines are basically “random” number generators with flashy lights and a handle. Currently casinos are allowed to set their own payout percentage as well, the allowed range is determined by legislation but can vary from 75% to 98% of the wagered bet. This can even be the case for different machines in the same casino and the customer has no way of knowing unless they access the code for the machines which I guarantee would get you kicked out of the casino, if not worse. When cryptocurrencies become the mainstream gambling sites like crypto-games will be more common and the market will come to expect a certain standard of fairness/transparency from all casinos including ones that operate in physical space. Obviously this worries Casinos because they benefit from being able to push their house edge as much as possible and misleading customers into believing they have a better chance than they actually do. In addition history has shown Casinos like to have as much control over money as possible and cryptocurrency by its very nature makes that difficult. So this is why I believe Casinos want to slow the adoption of cryptocurrency, to get the most profit in the time they have left before they are forced to change with the market. Casinos have been known to influence monetary policy throughout history so its not to hard to believe they would be lobbying for their interests in this case. Additionally I should clarify that I don't believe that there is a Casino Conspiracy to stop cryptocurrency I simply think that local casinos are using their influence to keep their profits as high as possible before they are forced to change.
I believe that this awkward status cryptocurrency has in Washington State and other states with similar laws isn't going to be permanent. In fact I think that the recent addition of virtual currency to the definition of currency stated by the exchange licenses is the first step toward wider adoption and legitimacy in the state. At the moment the regulations are very inconvenient for everyone involved but offer some consumer protections. As cryptocurrency gains popularity/adoption and more exchanges acquire licenses I think the laws will be refined and eventually (it may take quite a while, likely years) we will end up with a state that sees cryptocurrency as legitimate is is set up to widely use it and even offer some consumer protections through regulation while hopefully not detracting from what makes cryptocurrency great with those regulations.
This post turned into something waaaay longer than what I expected but I hope you enjoyed the read and if you have any thoughts or things I got incorrect please comment below! If you like this post please consider leaving an upvote, resteeming, and following for more content in the future.
For those of you still here, I found a survey of Washington Casinos from 2016 that includes some interesting statistics and short descriptions of where they want to take the industry here. Looks like there is significant interest in E-sports and gambling around it.
Sources:
http://www.dfi.wa.gov/documents/money-transmitters/barriers-umsa.pdf
http://www.gambleonline.co/usa/washington/laws/
https://buckleysandler.com/blog/2017-05-01/washington-state-enacts-law-defining-licensing-requirements-transmitters-money-and-virtual-currency
http://www.wsgc.wa.gov/docs/spectrum-report-09-28-16.pdf
https://en.wikipedia.org/wiki/Slot_machine#Payout_percentage
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@ahlawat
nice