There are no specific laws relating to gambling with bitcoin. As such we assume that gambling with bitcoins falls in the same legal category as gambling with government currency. If online gambling with your local currency is legal where you are then online gambling with bitcoins is also legal where you are. If online gambling is illegal where you are gambling with bitcoins has the benefit of being anonymous. The laws and legal systems exist to serve the state and no one else, there is no moral obligation to comply and I recommend you mostly ignore them as they are a hindrance.
Politicians are mostly out of touch with the realities of online gambling as can be seen in the patchwork of confusing legislation that might relate to online gambling and the fact online gambling is popular in every country where it is banned. Many experts recommend liberalisation and regulation with a taxation framework to raise government revenue and provide consumer protections. These recommendations have been mostly ignored by governments due to the lack of public interest and the moral and religious influences that make gambling laws politically sensitive.
Will the Authorities Try to Stop Bitcoin Gambling?
The US Department of Justice’s method of attacking government currency gambling operators that it does not approve of is to cut of the customers ability to deposit and withdraw by penalising payment processors and financial institutions if they provide services to gambling operators. This is not possible with bitcoin gambling operators so if authorities want to move against them they will have to resort to domain and server seizures and physical office raids. However even these extreme measures will not stop bitcoin gambling as we are developing censorship resistant technology, such as namecoin decentralised DNS, maidsafe decentralised hosting and…not having an office, faster than a the government bureaucracy can respond to it.
Individual gamblers will not be the target of law enforcement. There have been many crackdowns on online gambling in places where it is against the law but these crackdowns have always been against the operators never against the individual customers. The USA Department of Justice seizure of Full Tilt Poker, Pokerstars and Ultimate Bet is a standard example, the authorities went after the gambling sites not the individual gamblers. In any case for bitcoin gambling the customers are anonymous.
Bitcoin Gambling License Jurisdictions
Companies with licenses to offer online gambling globally argue that other nations local gambling laws do not apply to them. They are only required to follow the laws in the jurisdiction in which they are licensed and located not wherever their customers IP address indicates they might be. Attempts by politicians, media and local gambling operators to paint offshore operators as unlicensed, law breakers is incorrect, self serving nonsense spouted to protect incumbents. Just because a company is not separately licensed in every nation in the world does not make them unlicensed if they have a licence to offer their product globally from another jurisdiction.
Contrary to this some lawyers argue that having a website available in a country and accepting customers from that country means a business is operating in that country even if they their servers and their licence are not located there.
Low taxing international centers for online gambling licences include Alderney, the Norther Territory in Australia, Curacao, The Isle of Man, Gibraltar, Malta and the Philippines. Costa Rica, Panama and Eastern Europe/Russia are the main centres for the Bitcoin gambling industry. Having a gambling licence somewhere does not mean the company has to be wholly located in that jurisdiction. They only need to have the servers on which the bets are being placed there and often this is just a token server holding a site back up and the real live servers are located wherever is best for the business.
There is no reason to think because an operator does not have a licence in your country that it must be a shady and unlicensed operator. Other jurisdictions have strict gambling laws, licensing regulations and player protections and many high quality, safe and law abiding gambling sites operate under them. However most licences require the operator to ensure their customers are over 18 or using the service for money laundering as such most licences require know your customer and anti money laundering procedures that involve collecting and storing their users identity and personal information.
Given most Bitcoin gambling operators allow users to be anonymous they can not comply with most licences, Curacao seems to be one exception and most bitcoin gambling operations that want the “legitimacy” of a licence get theirs from Curacoa although with a Curacoa licence it is still be against US law to accept US players. Real world experience such as the Sports Alive debacle in Australia, Full Tilt Poker and the Ultimate Bet scandal teaches us that a licence is no guarantee of competence, honesty or legal protection if things go badly.