Metaverse Casinos: A Regulatory Wild West
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The metaverse is an immersive online universe on the blockchain. It offers a wide variety of activities and entertainment options. Some platforms within the metaversa are more developed than others. The development of digital assets including cryptocurrencies and non-fungible tokens (NFTs) is blurring the lines between a virtual game experience and reality. What seems to some like a game will increasingly have real-world economic consequences for users and the businesses with which they engage in the Metaverse.
Gamers in the metaverse can play online casino games with their friends and social network virtually without the burdens and restrictions of physical travel. Unlike traditional online casinos, the Metaverse attempts to replicate the full casino experience using a unique avatar and virtual reality technology. It is possible to control their avatar’s behavior in a similar way to controlling their own conduct in real life. Metaverses casinos do not accept traditional fiat currency.
Some people think the metaverse is insulated from real life legal restrictions. Any gaming and wagering activity that is offered to U.S. citizens in the Metaverse (on an unregulated basis) is likely to draw the attention of regulators.
Despite the popularity of metaverse gaming, the top U.S. operators have largely stayed on the sidelines while offshore and smaller companies dominate the space. Online gaming is legal in only a handful of states. There is significant regulatory and legal uncertainty surrounding metaverses. It is highly probable that metaververse casinos will be subject to direct regulation. The industry is working toward more immediate and attainable goals, such as expanding legal online gaming. Currently, fewer than 10 states offer online casinos and/or poker.
Online gaming is legal in only a handful of states. Regulators are reluctant to pursue the legal use of cryptocurrency.
Regulators are interested in regulating the development of metaverse casinos. The current regulatory framework does not cover the risks associated with the virtual world. The regulation of the industry is not yet clear. There are risks of international policy implications and financial fraud scams. 28 members of Congress urged the Department of Justice to prosecute offshore sports betting companies operating illegally in the U.S. absent a known regulatory scheme, even successful operation of a metaversian casino does NOT foreclose adverse action or shutdowns in future. It is unclear how, if and to what extent existing regulations apply to metaverversity.
There are significant barriers to operating gaming platforms in the metaverse. Forward-thinking gaming companies are preparing to enter this new world when it is safe.
