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Online casino gambling is legal and underway in just six states. However, Metaverse casinos are available anywhere with Internet connections — and state legislators and regulators are trying to catch up.
It’s not just about whether a state’s appetite s broader gambling laws using US dollars. This is also about other forms of money, from cryptocurrencies to non-fungible tokens (NFTs). Pay-to-earn games were seen as a gateway product – and may still be – but the collapse of Axie Infinity’s platform demonstrates how fleeting this can all be.
There’s a lot to process before the writing of laws actually begins.
In Part 4 of PlayUSA’s series on the gamblification of the metaverse, we ask Martin Lycka, SVP for American Regulatory Affairs and Responsible Gambling at Entain, about possible regulatory perils.
Part 1: Introduction
Part 2: Why Metaverse Casinos?
Part 3: Will Conventional Casinos Go Meta?
PLAYUSA: What are the gray areas for those who want to gamble in the metaverse or open casinos there?
Martin Lycka: I reckon that actually is representative and illustrative of the clash between the traditional world of gambling and not only gambling – the real world as I call it – and the virtual reality world. Indeed, when it comes to cryptocurrencies, though, now the feds seem to be picking up a lot of that.
It’s already been baked into anti-money laundering legislation, and the securities laws are picking it all up as well. And they are being amended to reflect all these new phenomena. And then it will start inevitably to trickle down or cascade down throughout the states as they at least attempt to bring their gambling regulation into the 21st century. 
So, I reckon that goes for the NFTs because NFTs themselves, that concept remains largely unregulated unless and until you start trading the NFTs. Then you are under risk of falling afoul of the applicable securities laws and anti-money laundering laws.
The metaverse itself, as a concept, I don’t think that anybody would have grasped legislatively just yet. At the same time, I reckon it’s inevitable. And then when you start juxtaposing the other regulatory bits and pieces on it – there’s gambling – then yes, indeed, it will be a challenge.
If I were a regulator, I would start by tackling the basics. So it’s a casino. Fair enough. It may be in the virtual reality space, so that presents additional challenges.
Ultimately, it’s a casino
ML: So I’ll be treading even more carefully and cautiously, but ultimately, it’s a casino, and I gather the same would go for the likes of the use of cryptocurrencies for gambling purposes.
Fair enough. As long as it’s a recognized currency and as long as it meets all the safety- and payments-related compliance protocols, then the legislators and ultimately the regulators should have an option to decide whether they would want to allow it or not, like any other currency.
In that regard, in my opinion, if Massachusetts chooses to ban credit cards, I don’t think it would be a smart decision, but it’s their right. It’s the right to do that.
What to do about NFTs?
ML: NFTs … it’s more convoluted. But if they were to start to be used for gambling vehicles or for gambling advertising purposes, then once again, I will go back to the basics and, first of all, try to make sure that operators comply with all the applicable advertising rules.
So, if there are restrictions on advertising … of course, there are not many across the US states. But I’m sure you’re aware of the regulatory position in Ontario. No advertising of gambling-related promotions and other incentives and inducements to play outside of the operator’s website. Then the same should apply for any vehicle or any means that are being used for these purposes.
How difficult and expensive will enforcement be for states trying to regulate metaverse gambling?
ML: First of all, I would argue that enforcement’s usually expensive. It’s not necessarily that hard anymore now sports betting has been regulated in most states, and – fingers crossed – online casino will have been regulated in more than six states.
But it will likely be more challenging when it comes to enforcing these laws and rules in connection with vehicles and instruments that have not necessarily been regulated themselves. In other words, it probably leaves a bit more latitude to those who offer them.
And ultimately, when it comes to the gambling, industrial gambling operators themselves, we simply, in my view, we can’t step away from the fact that we’re gambling companies. That, I would suggest, ties back with all my points about going back, going back to the basics.
