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Macau’s Digital Currency Will Provide Lessons For US Online Casinos

If the United States were to create an official digital currency, there could be benefits for regulated online casino operators

Digital Currency
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Derek Helling Avatar
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One of the centers of gambling activity on Earth is about to be part of an experiment. The US government and gaming companies in the country’s regulated space should study the test.

Macau’s forthcoming digital currency is the first foray of a government of such prevalence into that schema. If it works, it could benefit US online casinos.

Digital currency will drop soon in Macau

While doubts about the present viability of a digital version of an official government currency remain, they aren’t holding back officials in Macau. According to William Chan of the Macau Post, the Macau Monetary Authority plans to “conduct a public demonstration of the e-Mop’s prototype system by the end of the year.”

E-Mop is a colloquial term for a digital version of the pataca, Macau’s only government recognized tender. Under a 2023 law, the e-Mop will have the same status in the government’s eyes as physical pataca.

Chan further reports that the Macau Monetary Authority has closed on agreements with the central banks of multiple countries to recognize the e-Mop. At this time, the US Federal Reserve is not on the list.

That could change, however. If the e-Mop is successful, other governments could replicate Macau’s system.

Digital currency is theoretically possible in the US

In the US, federalism reigns as a political framework. That means, on its most basic level, that powers not explicitly reserved for the federal government by the US Constitution belong to the states.

One of those powers that the Constitution does designate for the federal government is the minting of currency. That is why online casino providers don’t have to navigate the figurative nightmare of up to 50 different currencies on top of all the differences in regulations governing gaming in the various states.

The creation of an official digital currency for the US would be no small undertaking. Even getting the ball rolling would require a mammoth lift in Washington, DC.

“In the U.S., if a digital currency is developed that the federal government and states accept as currency, it would need to be created by Congress,” said Teresa Goody Guillén, partner at BakerHostetler. “That legal tender would likely be a central bank digital currency (CBDC), which is a tokenized and blockchain-based version of the dollar that is regulated by the federal government.

“The Federal Reserve Board would need to conclude that it is a safe digital asset before the U.S. could issue CBDC. To be considered safe, the Fed would need to find that it does not have credit and liquidity risks, is privacy-protected, intermediated, transferable, and identity-verified. That means that the private sector would be needed to provide infrastructure, such as accounts or digital wallets, to enable transferability, privacy protection, and identity verification.”

To this point, there has been almost no clamor for the US government to even explore a digital currency. A successful launch of e-Mop in Macau could alter that status quo, though.

Benefits of digital currency

It’s possible that Macau could expand international competition to provide the best infrastructure for finance.

“From a global perspective, China’s digital currency exemplifies the international race to develop national digital currencies,” said Dr. Tonya M. Evans, professor of law at Penn State University’s Dickinson College of Law.

“The U.S. will need to balance privacy and control if it wants to remain competitive, and a digital dollar could attract international players or, conversely, lead to stricter domestic regulations.”

Evans said she believes there could be some benefits for commercial enterprises in the US that engage in e-commerce, like online gambling providers.

“Economically, a digital dollar could streamline transactions in online gambling, making them faster, cheaper, and more accessible across state lines,” Evans said. “This could improve the user experience and reduce costs for operators, but it may also pressure states to harmonize their gambling laws due to the increased ease of cross-border transactions.”

Goody Guillén concurs, listing other potential upsides.

“The traceability of blockchain transactions could improve the prevention of money laundering and fraud, and also help recover fraudulent transfers,” Goody Guillén said. “Recovery of funds could be accomplished by building a structure such that transactions can be reversed, or a digital asset is frozen in the wallet of the bad actor and potentially destroyed, and reissued to the proper owner.”

So if it’s all possibly rainbows and sunshine for online gambling companies, why isn’t the industry pushing for this in Congress? Trepidation over the unknown might be a deterrent.

Challenges and obstacles for digital currencies

It’s still possible that the coming public demonstration of the e-Mop will mostly reveal all the problems that exist with a digital currency. In essence, the demonstration will be the rubber meeting the road for the entire concept in terms of how well it addresses the many concerns.

“Systems security is a top concern,” Evans said. “A U.S. CBDC would require strong encryption and cutting-edge cybersecurity protocols to protect against cyber threats, especially in online gambling, which handles sensitive financial data.

“Blockchain technology could enhance security by offering a transparent and immutable ledger, reducing risks of fraud and manipulation.”

​​The main implementation challenge will be integrating a digital dollar into current payment systems. Online gambling platforms would need to adapt quickly, requiring significant technical upgrades and partnerships with payment providers that support CBDCs. Educating consumers on the security and ease of use of a digital currency will also be critical for its adoption.”

Even if it proves possible to offer a digital currency securely and consumers trust the product, the use of that technology might bring a new level of oversight to online gambling companies’ daily transactions that could prove onerous, at least to begin with.

“From a legal standpoint, a U.S. CBDC would likely increase regulatory oversight in online gambling, particularly in terms of AML/KYC requirements,” Evans said. “It’s also possible that federal regulators could impose specific restrictions on using a digital dollar for gambling, which could complicate operations for some platforms.”

A US digital currency won’t happen tomorrow

A digital currency in the US is probably years, if not decades, away still. At this time, online gambling companies operating in US jurisdictions have more pressing concerns.

Even so, Macau’s forthcoming demonstration should at least get the issue on the radar of those companies and gambling regulators, especially if it proves successful. A digital currency in the US might be inevitable and proactive decisions could ultimately create a better system.

“While a U.S. digital dollar presents opportunities for the online gambling sector, there are significant technological, legal and regulatory hurdles to overcome,” Evans said. “These issues will need to be addressed for a successful implementation that supports both innovation and compliance.”

Derek Helling Avatar
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Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

View all posts by Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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