You might have seen them on online forums or heard your friend or coworker talk about them—metaverse casinos. As this is a relatively new market, you want to know whether they’re legal before investing your time and money. After all, if you’re a newcomer to online gambling, it’s better to be safe than sorry.
The legality of metaverse casinos depends on the local laws on online gambling. Although they are accessible to most players, their legal status can change when lawmakers pass new regulations.
Let’s take a closer look at metaverse casinos and their legality. In this article, I’ll talk about how they operate. Also, I’ll cover any risks that come with playing in these types of casinos.
What Is the Legal Status of Metaverse Casinos?
Learning more about what you’re getting into before you jump in is always recommended. Given how new this concept is, doing your due diligence is essential.
From a legal perspective, metaverse casinos currently operate in a gray area. Sure, they do have licenses from certified gaming boards, which does allow them to provide gambling services to players on their website.
But does this mean you have the green signal to play your favorite casino games in virtual reality? Not exactly. There are several things you need to know before you decide to jump in.
How Do Metaverse Casinos Operate?
What do I mean by a gray area even though metaverse casinos have licenses from certified gaming boards?
Well, as you may already know, regulations are strict when it comes to gambling. If casinos break any laws, they often have to pay hefty fines. The regulatory body may also ask the casino to stop serving players from specific regions.
This becomes a factor when casinos offer gambling services where players have to purchase tokens to play.
However, metaverse casinos operate differently to get around regulations. For instance, a common practice among these joints is implementing a play-to-earn model.
In other words, you don’t have to pay in cryptocurrency or fiat currency to start placing bets in the metaverse casino.
However, you still have to buy non-fungible tokens (NFTs) to sit at any table.
To help explain this concept, let’s look at ICE Poker, a popular metaverse poker game in Decentraland.
If you want to play in this virtual world, you need to get an NFT, such as a wearable item for your character in the metaverse. You can think of NFTs as in-game items (this is only applicable in this example).
With this NFT, you can enter a poker tournament. Depending on how you finish, you’ll receive ICE tokens, which you can exchange for cryptocurrencies or fiat currencies.
What if you can’t afford to buy their NFTs? In that case, the platform allows players to lend their NFTs to others. Rather than charging a fee for using the NFT, both players split the profits. This allows NFT owners to generate passive income while users can play without using their money.
The lender gets a smaller cut when compared to the borrower. Now, if you are a skilled poker player, you can start entering ICE Poker tournaments for free, provided you find someone to lend you an NFT.
Risks With Metaverse Casinos
Using NFTs instead of your real money can seem like a great advantage, and you may be thinking about playing on metaverse casinos.
However, you should practice caution. These platforms’ legal statuses can change anytime. Because of how new they are, regulators are still far behind.
Although it may take a while to create new rules and regulations, this doesn’t mean they haven’t been paying attention to this market and taking action. I’ll give you four examples to highlight the risks that come with metaverse casinos.
Sand Vegas Casino Club
Sand Vegas Casino Club promised players a chance to play in the metaverse casino by purchasing NFTs. They also offered users who bought their NFTs the opportunity to earn passive income by splitting the profits (up to $81,000 annually).
This seems like a great deal where everyone is a winner.
Unfortunately, Alabama and Texas regulators declared that the NFTs offered by Sand Vegas Casino Club were illegal. As a result, they sent the metaverse casino an emergency cease and desist order.
According to the Texas regulators, the NFTs offered to players come under the Texas Securities Act, section 4001.068. As a result, these NFTs are illegal.
The regulators also found that the casino did try to emulate Las Vegas Sands Corporation by using a similar name, color, logo, and style.
Due to the cease and desist order, OpenSea, a popular NFT marketplace, stopped users from trading the casino’s NFTs.
Keep in mind that Sand Vegas Casino Club has a Curaçao gaming license.
Flamingo Casino Club
Another metaverse casino that came under the regulators’ scanner was the Flamingo Casino Club.
Like Sand Vegas Casino Club, they were selling NFTs, which gave players a portion of the casino’s profits.
Alabama, Kentucky, New Jersey, Texas, and Wisconsin considered Flamingo Casino Club fraudulent.
According to regulators, the casino was run by Russian scammers targeting US players. They didn’t provide users with accurate information about their addresses and telephone numbers.
The casino claimed they partnered with the Flamingo Las Vegas casino hotel. However, the regulators discovered that this was false.
Similarly, the casino announced they had support from Coinpedia, Marketwatch, and Yahoo. Again, the regulators proved this wasn’t true.
Due to the overwhelming evidence against Flamingo Casino Club, they received a cease and desist order.
OpenSea took action, as they did with Sand Vegas Casino Club, and no longer allowed users to trade their NFTs.
If you think about it, using NFTs to allow players to play and rewarding them with ICE tokens, which are redeemable in cryptocurrency and fiat currency, seems like a great deal.
Which it was until the crypto market suffered a crash. Although decentralized currencies have a lot to offer, they are unstable and fluctuate significantly in value.
The same applies to ICE tokens, which can be problematic. At the time of writing, ICE tokens are worth less than one-tenth of a cent. If your winnings can drop their value significantly, it becomes harder and harder to justify playing on ICE Poker. It only makes sense if you’re playing for fun and have no intention of making a quick buck.
To bring up the value of these tokens, the creators decided to burn them to reduce the supply of this cryptocurrency. They also started hosting tournaments as part of their strategy to raise the price of these tokens.
Atari is one of the biggest names and pioneers of the video game industry. When such a player enters the metaverse casino market, as you can imagine, it will generate hype—and it did.
Atari, along with ICICB Group, was planning on creating a metaverse casino on Decentraland. Players can play casino games and stand a chance to win by placing bets.
The metaverse casino rewards users via Atari Token, based on the Ethereum blockchain. This project had potential, as the creators wanted this token to be the default for the iGaming industry.
However, the gaming giant decided to track back and terminate its partnership with ICICB Group. They stated that Atari Token and Atari Chain are no longer licensed by them.
Although they withdrew from the partnership, they are still optimistic about what blockchain and its related technologies offer.
Should You Play on Metaverse Casinos?
Given how everything is panning out in this market, you might be wondering if you should give metaverse casinos a shot. After all, there aren’t any rules and regulations that explicitly state that this is illegal.
While there isn’t anything wrong with playing in these casinos, you must practice caution. Remember, regulators still need to understand this industry before they create appropriate laws.
Because of this, you never know if the metaverse casino you’re playing in will have to shut the shop because it doesn’t comply with existing or future rules and regulations.
Several metaverse casinos offer similar services to Sand Vegas Casino Club and Flamingo Casino Club. In other words, you have to buy NFTs, which will give you access to the tables.
Similarly, they also promise to share the profits with players, which can be problematic. If regulatory bodies follow the actions of Alabama, Kentucky, New Jersey, Texas, and Wisconsin, they can stop the sale of these NFTs.
I recommend waiting to see the path regulators take to regulate metaverse casinos.
Currently, metaverse casinos are operating in the gray area as there aren’t any laws regulating this type of iGaming. However, this is subject to change when regulators introduce rules and regulations these platforms have to follow.
Sand Vegas Casino Club, Flamingo Casino Club, and Atari Casino clearly show why you should practice caution when playing in metaverse casinos. It’s better to wait for regulators to create a framework for these casinos before creating an account on these platforms and placing bets.
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