Unlicensed Gambling Crypto Income

[JamesFriday]

Thought it would be fun to dive into some hypotheticals, my friend needs some help scenario.

Lets say you want to withdraw big crypto winnings from your favorite online unlicensed casino, sports book or poker room. A six figure EUR sum.
The site you have been using bear no marks of any license and might just be a phantom casino for all you know with no real company behind.

You can prove your crypto deposit on the site, and that the crypto deposited was bought with your own hard earned money from many hours of flipping burgers at BurgerKing.
You have a PDF from the site with your whole betting history showing how great you are at gambling which would be used as SOF.
If anyone would be interested in verifying your PDF, i'm sure the customer service email will confirm.

Now here comes the fun part,

1) What countries would you be able to declare these winnings in?
Some countries make the bare act of using unlicensed offshore casinos illegal, while others only try to make it as hard as possible for the player to use such services.
- Norway for example made it illegal for banks to send and receive payments from any service except from their national monopoly, but citizens are still allowed to use the unlicensed services at their own risk and must pay tax on winnings over a threshold.
- I think Bulgaria is also a possibility, but would have to be taxed.
- If you gamble on unlicensed casinos from Spain on the other hand you risk legal repercussions.
- Cambodia allows foreigners to gamble, but i'm not sure if this includes online casinos or only their land based licensed ones.

2) Now including tax in the equation, which of the possible jurisdictions offer low to no taxes on such winnings?
The UK for example don't impose any tax on the player, and charge the casino instead.
- This might be hard to impose on an unlicensed and phantom casino, so how do they handle citizens importing untaxed winnings.

The purpose here to figure out jurisdictions where you could earn and declare such crypto winnings and pay the applicable taxes if any, to then be able to spend the crypto either on real estate or other high ticket items without being interrogated and or charged with illegal gambling or laundering.

Any input, experiences or thoughts are welcome
Thank you for taking the time reading my post.

 

[Sols]

JamesFriday said:
1) What countries would you be able to declare these winnings in?
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For most people, it's wherever you live. Just declare the winnings as gambling proceeds. The tax authority likely won't care where you won it, unless you live in an extremely gambling-hostile country (for example certain Sharia law countries). Tax authorities often have a phenomenal tolerance for money laundering and illegal gambling. If the gambling you did was illegal, that might be a problem if law enforcement learns about it.

JamesFriday said:
2) Now including tax in the equation, which of the possible jurisdictions offer low to no taxes on such winnings?
The UK for example don't impose any tax on the player, and charge the casino instead.
Click to expand...

This is the case in many countries, but often with limitations around where the casino is licensed or where the winnings were gained. So while your winnings may be tax exempt if you're a Finnish player gambling on a Maltese gambling site (EU single market), the same Finnish player may not be able to enjoy tax exemptions if the winnings originate from Curaçao.

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This is the probably the answer to your question.

 

[JohnnyDoe]

Sols said:
For most people, it's wherever you live. Just declare the winnings as gambling proceeds. The tax authority likely won't care where you won it, unless you live in an extremely gambling-hostile country (for example certain Sharia law countries). Tax authorities often have a phenomenal tolerance for money laundering and illegal gambling.
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This is true only if you gamble in your basement.

Authorities will see that the funds have an illegal origin, and they will consider them proceeds of crime - as a minimum, money laundering. It will be up to OP to prove the contrary, which is impossible.
Result: funds confiscated, OP indicted. He will lose well over 100% of the money.

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[Sols]

JohnnyDoe said:
Authorities will see that the funds have an illegal origin, and they will consider them proceeds of crime - as a minimum, money laundering. It will be up to OP to prove the contrary, which is impossible.
Result: funds confiscated, OP indicted. He will lose well over 100% of the money.
Click to expand...

That's if the tax authority passes the information on to law enforcement (or if law enforcement has access to tax records) and if law enforcement acts on it. The tax authority itself very often doesn't care where the money comes from. Their job is to collect taxes, not enforce the law.

From what I've seen, across millions of gamblers on offshore/unlicensed in for example Europe, the vast majority of people don't declare their winnings. In any case, law enforcement almost never comes for the players. It's simply not a priority if it's even in scope of local law at all.

However, for higher amounts (like the six figures OP mentions), the risk might go up a bit. I'm not saying it doesn't happen, just that it's a fringe outlier.

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This is the probably the answer to your question.

 

[wellington]

Casino funds are flagged automatically in crypto as they are usual buckets for laundering - in the UK people were debanked and their funds seized from what i read a few years ago - some were indicted/charged.

So in theory - I don't gamble - but I'd hazard leaving the west and converting in your new country should it be non illegal there and the funds source from you clean would allow you to enjoy them - but in Europe you'd likely have a periscope pushed up your a*s, not at first, a few years after

 

[JamesFriday]

Some great thoughts and input here. Seems like consensus is that you run a high risk of a sore a*s in strict jurisdictions.
However as @Sols points out, this would likely only be the case if the act of unlicensed gambling is within the jurisdictions scope of law.

So lets say the 6 figure sum is not already made, so now you can relocate to a country where it would be legal to play on unlicensed casino providers. If you are not already in one of course.
Would any of you be able to list any safe countries for this?
Your tax residence can now be tweaked for the optimal tax no matter the local gambling laws as your gambling acts are not performed at home.

In another scenario, If you choose to keep your gambling base and tax residence in the UK for example and they start an investigation, you still would be able to show the PDF with gambling records as SOF. Wouldn't this be enough to prove no laundering is going on? and i assume your reply was based on a country where offshore gambling is illegal? @JohnnyDoe

I could also imagine that even if you were to gamble on a unlicensed site from a country where its illegal, there is no law imposing a investigation duty for you to figure out if the site you use hold the necessary licenses to operate. They could even claim to hold EU licenses.

 

[JohnnyDoe]

JamesFriday said:
In another scenario, If you choose to keep your gambling base and tax residence in the UK for example and they start an investigation, you still would be able to show the PDF with gambling records as SOF. Wouldn't this be enough to prove no laundering is going on? and i assume your reply was based on a country where offshore gambling is illegal? @JohnnyDoe
Click to expand...

Gambling records from an unlicensed casino have zero value.

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[JamesFriday]

JohnnyDoe said:
Gambling records from an unlicensed casino have zero value.
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In the UK, there is no law making it illegal for individuals to profit from the use of unlicensed casinos. Under the Gambling Act 2005, it is the providing, advertising or promoting of unlicensed casinos which is illegal. Considering this, i cant see how the gambling records from the casino have 0 value as for the reversed burden of proof. If the authorities believe your PDF is fake then that's another issue, but should be their job proving that.

Would you please elaborate on your comment? Perhaps you have some experience or knowledge of any case law where such documentation ended with money laundering sentences?

 

[JohnnyDoe]

JamesFriday said:
In the UK, there is no law making it illegal for individuals to profit from the use of unlicensed casinos. Under the Gambling Act 2005, it is the providing, advertising or promoting of unlicensed casinos which is illegal. Considering this, i cant see how the gambling records from the casino have 0 value as for the reversed burden of proof. If the authorities believe your PDF is fake then that's another issue, but should be their job proving that.

Would you please elaborate on your comment? Perhaps you have some experience or knowledge of any case law where such documentation ended with money laundering sentences?
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So I can setup my own unlicensed casino (that is, create a simple website or even just pretend it went offline some time ago), produce a pdf and that's it? Genius! That's the secret receipt for successful laundering.
When the prosecutor asks me I will just say “come on, prove that the pdf is fake” and it will be checkmate. thu&¤#
Ah, the power of pdf.

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[Sols]

JohnnyDoe said:
So I can setup my own unlicensed casino (that is, create a simple website or even just pretend it went offline some time ago), produce a pdf and that's it? Genius! That's the secret receipt for successful laundering.
When the prosecutor asks me I will just say “come on, prove that the pdf is fake” and it will be checkmate. thu&¤#
Ah, the power of pdf.
Click to expand...

No, the set up you proposed probably wouldn't work. But it's not black and white. The details of the situation matter.

If you have gambling history from an unlicensed yet still well known casino, the funds you have would likely not be considered illegally gained. Winning at an unlicensed casino is not a crime in most of the jurisdictions. In the eyes of the law, offshore/non-local license (i.e. Curaçao) is just as much unlicensed as having no license at all.

For a lucky winner cashing out a few hundred thousand from a verifiably real but unlicensed gambling website, where the operator has provided proof of betting/play history, the biggest problem is tax on the winnings ”” not money laundering.

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This is the probably the answer to your question.

 

[JohnnyDoe]

Sols said:
a verifiably real but unlicensed gambling website, where the operator has provided proof of betting/play history, the biggest problem is tax on the winnings ”” not money laundering.
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Licenses exist to ensure, among other things, compliance with AML regulations. Being “real”, “well known” and with a “history” doesn't make an operation legit.

As usual, you can try your luck in court with your pdf and try to convince the judge that they should not get their hands on all your “clean” money.

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