In the last few years, cryptocurrency has become a vital part of the business culture in Australia. Many Australians already hold digital assets, and the government agencies have official guidelines for how crypto should be taxed and managed in the country. Because of how easy crypto makes business, companies are starting to think about how to make use of crypto in their products, especially gaming companies.
Gaming in Australia covers mobile gaming, esports, skill-based games, and casino games. Among casino games, online pokies remains one of the most recognised and played games. However, due to gambling restrictions in some parts of the country, Aussie players often turn to offshore sites to access them. These platforms are typically licensed and regulated in their own jurisdictions, even though they operate outside local laws.
(Source: https://www.cardplayer.com/au/online-pokies-real-money)
Many such gaming businesses have uncovered an opportunity to reward their players digitally, and crypto makes that easy and possible. However, any business that intends to use crypto as rewards must understand that the government has strict regulations and should design their games and their reward system in a way that is compliant.
What The Law Currently Allows And Bans In Australia
Australian laws can be very strict when it comes to the gaming culture. There are clear lines between the types of online gaming that are permitted and prohibited, especially when cryptocurrency is involved. Under the Interactive Gambling Act 2001 (IGA), where applicable, it is illegal for gaming platforms to provide chance interactive gambling services to people in Australia. This law was tightened even further on 11 June 2024 when regulators banned the use of digital currencies and credit cards for betting services.
However, the law still allows certain forms of online wagering and competitions as long as they are strictly licensed under a state or territory regulation. For example, some sports betting is legal as long as the service holds a license and complies with the IGA. Even physical gaming spaces in the country, like pubs, game cafes, or pokies, are legal, but they are only required to operate under regulated services and must comply with state-based regulations.
Any gaming platform that would like to develop games in the country and reward players with crypto must be very sure that their games are not under the interactive gambling services banned by the government. The use of crypto for wagers is outlawed for Australian-based licensed services.
Why Crypto Can Be Useful For Gaming
The good thing about rewarding players with crypto is that it offers great opportunities that are too good to pass up. In Australia, currently, 81% of adults play video games of some kind; this means that almost everyone in the country is a player and therefore understands digital value systems. Another survey has shown that about 23% of Australian adults now own some form of crypto asset. This means that it is not a bad idea for gaming companies to introduce crypto into their reward system.
With these numbers, anyone running a game platform focused on skill, competition, or community can use crypto rewards to boost engagement in ways older reward systems cannot match. The average retention on Day 1 of playing a game is about 29% and by Day 30, it has dropped significantly to about 6%. This shows how difficult gaming companies have struggled to retain engagement. However, if gaming platforms start rewarding players with something of real value, like crypto, then they are increasing the chance of retaining their players and also getting them to refer new players to their sites.
And in physical games and events too, like quiz nights, board games competitions, creative contests, etc, crypto rewards can bring more awareness and new players for every event they hold. According to research, about 52% of midcore and hardcore Australian gamers say they prefer games that offer a big reward.
Economically, the Australian video games market is growing rapidly. In 2023, Australians spent AUD 4.4 billion on games and game-related hardware, up 5% year over year. This shows how much profit gaming companies can make if they position crypto rewards into their system.
How Tax Works When A Business Rewards People With Crypto
When a business decides to introduce crypto as part of their reward system, they need to understand how tax will apply. In Australia, crypto is considered property, not money. This means that when a business gives crypto tokens to a player, it is similar to giving them property, and this counts as a disposal event for the business. This reward needs to be recorded by the business at the fair market value at the time of the award.
Gaming companies must note the value of the token at the time they are issuing the reward and may also need to consider if GST, income tax, or other obligations apply. For the player receiving the reward, they are not required to pay taxes immediately they receive the crypto reward, as long as it’s a reward and not earned as income from employment or contract work. However, when the player later sells, trades, or uses the crypto, then they need to pay capital gains tax.
In Australia, if the player holds the crypto for more than 12 months before disposing, then they are eligible for a 50% CGT discount on taxable gain.
Conclusion
Rewarding players with crypto in Australia can work, but only for other types of gaming that do not involve wagering. But the business must be willing to follow the strict laws, keep good and updated tax records, and be legally compliant.
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