Navigating KYC and Privacy in Crypto Casinos: What to Expect and How to Stay Anonymous

What You Need to Know About Identity Checks and Online Gambling

One of the biggest selling points of cryptocurrency and crypto gambling is privacy. But evolving regulations are putting that under threat.

In this original CoinBets guide, we’ll explore the role of KYC at crypto casinos, how it impacts player privacy, and suggest some practical strategies for preserving your privacy. Whether you’re a seasoned gambler or a newbie to the space, it will give you the insights you need to stay safe.

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The Crypto Casino KYC Paradox

There’s something of a paradox emerging in the world of online gambling. The development of blockchain technology has resulted in increasing decentralization, with crypto casinos becoming immensely popular. And, as you know, one of the biggest selling points of crypto is privacy.

However, governments worldwide are becoming increasingly authoritarian. They are demanding casino operators collect ever more personal information to meet KYC (know your customer) and AML (anti-money laundering) requirements.

So, privacy-conscious gamblers face a dilemma: how can they protect their privacy while complying with these increasingly strict KYC requirements?

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KYC at Crypto Casinos

But first, let’s take a look at what KYC is, and why it is increasingly required. KYC stands for ‘know your customer’ and refers to the process by which online casinos verify the identity of their players. Although KYC requirements can vary, they generally include collecting and verifying personal information including a player’s full name, date of birth, residential address, and in some cases, financial details.

Why KYC is Required

Regulators and governments insist that KYC is required to enable effective anti-money laundering (AML) and counter-terrorism financing (CTF) efforts.

To support this stance, they will often point to examples of dirty money being laundered through online casinos. For example, how the Italian Ndrangheta mafia laundered around €2 billion through Malta-based online betting companies between 2006 and 2014.

Some gambling regulators, like the UK Gambling Commission (UKGC), also stress the importance of KYC to combat underage and problem gambling.

However, KYC requirements are also exposing law-abiding online gamblers to an ever-increasing risk of identity theft and fraud. And, of course, many people see KYC checks as an assault on the fundamental right to privacy.

Misconceptions About KYC

Before we move on, it’s important to address a couple of common misconceptions about KYC at crypto casinos:

• The term ‘KYC-free’:
  You’ll see this term used to describe crypto casinos in many reviews, but it might not mean what you assume. Often, it means you can open an account and deposit without providing ID documents, but you might still need to go through KYC procedures before you can cash out.
  
• If I’m using crypto, I won’t need to deal with KYC :
  This is often the impression given by reviews and marketing material, but it is wrong. Just because you are using crypto doesn’t mean you won’t have to verify your identity. Rather, KYC requirements are chiefly dependent on licensing and jurisdictional variables.
  
• Casinos use KYC as an excuse to delay payouts:
  This is a frequent complaint on casino review sites, and while it may be true in some cases, it’s rare. Licensed casinos, especially in strict jurisdictions, must be very thorough with their checks to avoid severe sanctions from regulators.

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Jurisdictional Differences in KYC Requirements

As a crypto casino player, one of the most important things to understand is how KYC requirements differ across the various licensing jurisdictions.

Of course, KYC has long been required at traditional online casinos in strictly regulated markets, like the UK, Sweden, and Germany. But is now increasingly common at crypto casinos too – including those licensed in the popular iGaming hub of Curaçao.

The table below will give you a rough idea of where the most popular online gambling jurisdictions fall in terms of KYC requirements:

Jurisdiction	Strict	Medium	Relaxed	None
Curaçao
Malta
UK
Sweden
Germany
Estonia
Kahnawake
Ontario
New Jersey
Anjouan (Comoros)
Alderney
Isle of Man
Gibraltar
Costa Rica
Panama

When it comes to traditional online casinos, you’ll find those with better reputations tend to be licensed in stricter jurisdictions. Indeed, it’s not uncommon to find traditional online casinos with multiple licenses.

For example, the popular online casino Duelz is licensed by the UK Gambling Commission (UKGC), Malta Gaming Authority (MGA), Swedish Gaming Authority (SGA), and Isle of Man Gambling Supervisory Commission (IOMGSC).

However, things are more difficult for crypto casinos because many jurisdictions prohibit (or as good as) the use of crypto for online gambling. This has resulted in most crypto casinos being licensed in jurisdictions like Curaçao and Anjouan – operating from countries with no licensing requirements at all like Costa Rica.

Interestingly, when Curaçao recently introduced a new, stricter, licensing framework, some crypto casinos (for example, BC.Game and Lucky Block), relocated to laxer jurisdictions like Anjouan.

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Different Levels of Casino KYC Requirements

We’ve seen how where an online casino is licensed affects KYC, so now let’s look at exactly what the requirements are.

Full KYC Casinos

Some online gambling platforms require full KYC verification before players can even deposit funds or play games for real money, let alone withdraw any winnings.

The exact process may vary but will involve submitting valid government-issued ID (national ID card, driving license, passport, etc.), proof of address (recent utility bill, bank statement, a letter from a government authority, etc.), and sometimes proof of income or source of funds (SOF) documentation.

Because crypto casinos are not licensed in the strictest jurisdictions, you are unlikely to find one that demands this level of KYC. However, it is now common with traditional online casinos – for example, the previously mentioned Duelz.

Partial or Tiered KYC Casinos

Most popular online crypto casinos fall into this category – for example, Curaçao-licensed casinos like BitStarz, BetFury, and KingBilly.

At these sites, you can open an account, make modest deposits, and play games without going through KYC. However, you will need to verify your identity before you make your first withdrawal.

KYC-Free Casinos

Some crypto casinos don’t usually require any KYC at all. These include those licensed in very lax jurisdictions like Anjouan (e.g, Bitz.io and Pigmo), unlicensed sites based in places like Costa Rica and Panama (e.g., Bovada and Betwhale), and fully decentralized crypto casinos (e.g. Luck.io).

However, you should be aware that even Anjouan-licensed casinos usually give themselves the right to conduct KYC if they want to. And, unsurprisingly, this is typically before a large withdrawal.

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Privacy Concerns and Risks of KYC in Crypto Casinos

Although its proponents argue that KYC is a good thing, helping authorities combat crime, it inevitably exposes players to significant risks.

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Data Security Risks

Even if a casino operator makes every effort to keep your personal data safe, there is still the risk they will be hacked.

In fact, even at licensed, regulated platforms, data breaches are not uncommon. After all, hackers know that casinos are storing the sensitive personal and financial data of thousands of customers. Once hacked, this data can be used for identity theft or sold on the dark web.

If a casino doesn’t hold your personal information, it can’t be stolen.

Data Used for Other Purposes/Sold

Although casinos in some jurisdictions (like EU countries and the UK) must obtain explicit permission to use personal data for things like marketing, it’s not the case in all areas. In some regions, it’s legal for companies to sell your information to data brokers unless you specifically opt out.

Not providing personal information in the first place removes this risk.

Anonymity Trade-Offs

In some countries engaging in online gambling is illegal and can result in fines or even worse.

If you’re a player in one of these areas, it’s probably not a good idea to provide personal information to an online casino. While the casino itself is unlikely to report you, snooping authorities may intercept it or somehow extract it from the operator.

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Strategies for Preserving Privacy in Crypto Gambling

Despite the seemingly unstoppable advance of KYC, there are some practical strategies you can use to enhance your privacy in the crypto gambling space.

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Using Privacy Coins

Privacy-focused cryptocurrencies like Monero, Zcash, and Dash use advanced cryptographic techniques to obscure transaction details, making it harder for third parties to trace the movement of funds. Of course, they won’t help if you’re using a casino that requires KYC before you can withdraw. However, using them whenever possible does provide an extra layer of security.

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VPNs and Anonymizing Tools

Using a virtual private network (VPN) masks your IP address, allowing you to access content, including crypto casinos, via a proxy IP in a different region.

This will allow you to access a casino that is blocked in your country, and it also helps prevent bad actors (including official authorities) from snooping on you. In fact, many people use VPNs like NordVPN, Malwarebytes, and CyberGhost as a matter of course whenever they browse the web.

However, using a VPN doesn’t solve everything. Many online casinos specifically prohibit the use of VPNs. These casinos may terminate your account, freeze your funds, or refuse to payout if they catch you using one.

Of course, using a VPN won’t help if you have to provide official documentation proving your identity and address. Additionally, in some countries, just using a VPN is illegal.

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Tips for Choosing a Good Privacy-Friendly Crypto Casino

1. Research, research, and then research some more:
   Because KYC-free crypto casinos will either have a license of dubious value (e.g. Anjouan) or no license at all, you’ll need to thoroughly check a platform’s reputation. Don’t just take the first reviews you find at face value.
   
2. Provably Fair Games:
   The best crypto casinos will offer provably fair games. These are blockchain-based games that allow you to personally verify the fairness of game outcomes. If you’d like to learn more about provably fair games, we’ve got an easy-to-follow CoinBets guide.
   
3. Platform Transparency:
   Good crypto casinos will be as transparent as possible in their operations. They will provide readily available terms and conditions, banking information, clear security and privacy policies, and information about the operating company. If you have trouble finding any of these things, it’s a red flag.

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Weighing the Risks and Benefits of KYC-Free Casinos

The KYC issue is something of a balancing act.

On the one hand, KYC-free casinos are convenient and allow you to gamble completely anonymously. On the other hand, using KYC-casinos is inherently risky because you won’t be protected by the safeguards found at regulated platforms.

Below, we’ll run through the main risks and benefits of KYC-free casinos.

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Security and Business Sustainability

The absence of KYC procedures can make KYC-free crypto casinos more vulnerable to fraud, cheating, and other malicious behavior. Needless to say, this can be damaging to any business. The inevitable result is that KYC-free casinos are more likely to disappear into the night, leaving players out of pocket.

Game Fairness and Transparency

Although provably fair games can help assure the fairness of games at KYC-free casinos, there is still a risk factor.

In highly regulated gambling jurisdictions, like the UK or Malta, casino operators are required to undergo regular audits by accredited third-party test labs. These ensure that the RTP (Return to Player) rate of games is accurate and the RNGs (Random Number Generators) used are genuinely random.

Because they are licensed in lax jurisdictions or not licensed at all, KYC-free crypto casinos are not subject to the same scrutiny.

Jurisdictional Risks

As already touched upon, in some countries, using KYC-free or unlicensed gambling platforms is illegal. Using a VPN or other tools to circumvent restrictions could land you in legal hot water too. And, even if you avoid these issues, if you’re gambling illegally, who are you going to complain to if a casino just refuses to pay your winnings?

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The Future of KYC and Privacy in Crypto Casinos

KYC at crypto casinos can’t be viewed in isolation. The push for more intrusive KYC in online gambling is part of a wider effort by governments to erode personal freedoms and privacy. But, as mentioned at the very start of this article, there’s a paradox developing. So, before we conclude, let’s just take a close look at what we can expect in the future.

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Trends in KYC Regulations

Authoritarians, including many politicians and lawmakers, hate all things crypto. This has become absolutely apparent over the past decade and is perfectly logical. The use of cryptocurrencies, and decentralization in general, gives more power to individuals and takes power away from centralized authorities.

This set the stage for a conflict. Indeed, it’s a conflict we’ve seen playing out for years – exemplified by the US SEC (Securities and Exchange Commission) trying to take down crypto project after crypto project.

However, while in the broader crypto space it’s relatively easy to fight back against draconian moves from authorities, in the online gambling space things are different. Because when it comes to online casinos, authorities can invoke the ‘colorful’ past of the gambling industry.

Specifically, they can play on the emotive issue of problem gambling and high-profile money laundering cases. These justifications will likely enable them to continue to tighten KYC obligations in most regulated markets.

Decentralized ID Solutions and Privacy-Enhanced KYC

However, blockchain technology also offers potential solutions for streamlining KYC processes. Specifically, decentralized identity (DID) systems and zero-knowledge proofs (ZKP) allow identity verification without revealing sensitive personal data to individual casinos.

In theory, crypto casinos could adopt these systems to allow players to prove they meet regulatory requirements without compromising anonymity.

However, although such systems would reduce risks associated with handing over personal data to casinos (like hacks and data theft), they would not necessarily hide your online actions from the authorities. After all, operators are required to cooperate with law enforcement and regulators to identify individuals and stop them using platforms for illicit purposes like money laundering.