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US Regulators Block Sales Of Casino NFTs

Not everyone seems keen on the metaverse, especially if that platform is on a decentalized protocol. NFTs have a close relationship with the metaverse because it provides suitable utility for their users. But when the lines between regulation and complete decentralization get blurred, state regulators negatively view NFT gambling in the metaverse.

US regulators block sale of casino NFTs
US regulators block sale of casino NFTs

Regulators Say No To An Online Casino

The U.S. regulators have sanctioned Sand Vegas Casino Club, an NFT project building a new metaverse casino. Security regulators from Texas and Alabama have ordered the project to cease the sale of NFTs.

Sand Vegas Casino Club minted over 11,000 NFT items. Each holder could participate in the gaming operations and obtain a share of the winnings. This triggered the U.S. regulators to see their actions as fraudulent, claiming the project illegally offered players unregistered securities.

According to the Sand Vegas Casino Club, Gambler and Golden Gambler NFTs could get a share of $24,480 respectively $81,000 per year from the metaverse casino earnings. However, the regulator’s actions can be marked as a turning point, given they’ve become interested in restricting the activities of a metaverse casino.

Following the cease-and-desist letter, OpenSea, the largest NFT marketplace, has also stopped the sale of the Sand Vegas Casino Club NFT on the premise that the collection is violating their terms of use. This means over 4200 NFT holders are restricted from transacting their digital assets.

As the NFT market continues to generate interest, regulators and governmental bodies concentrate their actions to combat any misconduct.

Regulators have only been interested in the metaverse activities of Sand Vegas Casino Club. According to their roadmap, the project is developing a web-based casino, but given the recent events, it’s not yet sure how the casino’s development and use will impact the project.

It is worth noting that, despite its high expectations, the metaverse currently only has a few hundred users at most. However, as the NFT and decentralized Metaverse sector continue to generate interest, regulators and governmental bodies consolidate their actions to identify and sanction any misconduct.

Regulatory impact on Metaverse gambling

The actions of U.S. regulators seem to be a first. However, Sand Vegas Casino Club is not registered in the U.S. Nonetheless; this marks a turning point for how metaverse/NFT gambling proposals must approach their market entry.

While there are no clear indications of what is permitted in the metaverse, regulators have shown token utility must comply with real-life ordinances. Then, token utilities must be redefined for casinos and crypto gambling NFT projects to enter the metaverse without any restrictions.

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Vlad Hategan
Vlad Hategan - NFT Gaming Specialist
153 Articles

Vlad has been active in the crypto space since early 2013 with a hands-on approach since late 2017. His focus has always been being able to showcase the value crypto brings to our digital landscape. That's why he tried almost every possible category from mining to NFT and ICOs - back in the day. In short, he enjoys every part of the blockchain space, from the community to the nitty gritty technological details.

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Reviewed and Fact Checked by Kevin O'Brien , Web3 & DeFi Writer