South Carolina lawmakers have introduced a bill to legalize online sports wagering, including digital currencies.
Senate Bill 444, introduced by Senator Thomas Davis, is the latest effort to bring a form of legalized sports betting to the Palmetto State. Notably, the legislation includes rare specific wording surrounding the acceptance of digital currencies for wagering.
The bill would establish the South Carolina Sports Wagering Commission, consisting of nine members appointed by the Governor, Senate President, and House Speaker. The Commission would be responsible for licensing, fee collection, and, importantly, regulatory compliance.
Fee, Age, and Geolocation Rules for Sports Betting Operators
Should SB 444 pass the legislature and be enacted, South Carolina could welcome a maximum of eight online sports betting operators. Each would be required to pay a non-refundable $100,000 application fee and a $1 million licensing fee. Each license would be valid for five years, and subsequent renewals would be subject to the same fee structure.
South Carolina does not currently permit retail sports betting, and under Sen. Davis’ proposed legislation, this would not change. Bettors would need to be over 18 and physically located in the state. Operators would be legally obliged to use geolocation and Know Your Customer technology to ensure compliance.
The legislation becomes more interesting when it states that each bettor may “only fund the account through” approved payment methods, which include traditional options but also specify “digital, crypto and virtual currencies” as well as “online and mobile payment systems that support online money transfers.” This could pave the way for legalized crypto sports betting in South Carolina.
Crypto’s inclusion is explicitly mentioned in the bill’s definition of cash equivalent, which lists “digital, crypto, and virtual currencies” as acceptable assets for funding sports betting accounts. These must be convertible to cash and used “in connection with authorized sports wagering.”
SB 444 proposes a 12.5% privilege tax on adjusted gross sports wagering receipts, defined in the bill as “the total of all cash and cash equivalents received by a sports wagering operator minus the total of winnings, promotional credits, federal taxes, voided wagers, and uncollectible receivables.” It also stipulates that licensees who report negative revenue in a month may carry the loss forward to future months.
The distribution of tax revenue would be as follows:
- 82% goes to the state’s General Fund.
- 10% is distributed to local governments for infrastructure projects.
- 5% is allocated to the Department of Mental Health for problem gambling programs.
- 3% funds the commission’s operational expenses.
The South Carolina Sports Wagering Commission would have the power to impose fines of up to $25,000 per violation of the state’s betting laws. It can suspend or revoke licenses for noncompliance.
Operators must report “abnormal betting activity or patterns” to the commission and the relevant sports governing body. Companies must retain information on wagers, bettor identity, bet type, and IP addresses for at least three years.
Why Crypto Sportsbooks Might Still Struggle to Enter South Carolina
Although crypto sports betting operators may be excited by the prospect of a state law permitting them to accept digital currency, another part of the proposed legislation would make it nearly impossible for current crypto-dedicated sports betting companies to obtain a South Carolina license.
The legislation reads: “To qualify, applicants must demonstrate operations in at least five U.S. states and submit references from relevant regulatory bodies.” It would also be required to designate a local representative from a company owned by South Carolina residents with a “demonstrated commitment of public service.”
Having proposed regulation that includes the word crypto seems a step forward, but the implications on the crypto betting industry warrant further consideration. As the current South Carolina rules read, it would permit established operators such as DraftKings to accept cryptocurrency as legal tender. This could lead to a domino effect in states across the U.S. accepting digital currencies but providing further market share rather than competition to the existing giants of sports betting.
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