FX Risks in Betting: The Impact of Local Legislation

About FX Risks

The concept can be described as the probability of losses due to changes in the exchange rate. The term is often encountered in the banking, insurance, and trade sectors. Gambling is entering the global market, so certain risks are becoming relevant for this business area ​​as well.

Sharp changes in the rate can have an impact on:

• profitability;
• costs;
• the overall economic result of project owners.

Why Risks for Bookmakers May Arise

Let us consider the most common reasons:

1. International audience of bettors. If a gambling brand operates in the global market, then users from different countries make deposits and place bids in their national units (dollars, pounds sterling, tenge, etc.). In this case, the main accounts can be kept only in one currency (for example, in euros), which leads to a reduction in the entrepreneur's earnings.
2. The difference between income and expenditure currencies. Revenue (deposits or rates) and expenses (salaries, licences, marketing, hosting, etc.) are carried out in different monetary units. If one of them weakens against another, companies may lose part of their profit during conversion.
3. Currency fluctuations. It can be explained by the influence of geopolitics, inflation, economic crises, and the actions of central banks. Severe wobbles can consume the margin and even lead to losses for bookmakers.
4. Conversion during transfers. Acceptance of deposits and payment of winnings through PSP services (financial service providers) are often accompanied by automatic conversion, additional commission, and rates that are unfavourable for project owners.
5. The use of cryptocurrencies. iGaming platforms working with BTC, ETH, LTC, and other digital units experience increased volatility. The rate can change in a matter of minutes, and the bookmaker can lose its income.

Thus, most entrepreneurs operating in the international market face FX risks. This factor should be considered when brands build a financial model, choose a jurisdiction, and look for B2B partners.

Features of Local Laws that Affect Fluctuations

The legal framework plays a key role in the formation of risks.

Regulation and Control

Many countries have restrictions on:

• conducting cross-border transactions;
• repatriating (returning) foreign currency revenues;
• selling part of the proceeds at a fixed rate.

Such requirements have been introduced in Kazakhstan, Ukraine, India, and other jurisdictions. It complicates the work of operators in the international market.

iGaming platform owners are:

• limited in the transfer of funds outside the country;
• required to convert GGR at an unfavourable exchange rate;
• limited in the use of foreign currencies.

Requirements for the Storage of Funds

Thus, in Malta and the UK, entrepreneurs must have 2 accounts:

• for operating activities (salary payments, settlements with counterparties);
• for the deposits of players (segregated accounts).

They can be opened in 2 currencies (like euros and pounds sterling). This affects the structure of the betting shop’s transactions and creates additional risks if the company works in the global market.

Tax Consequences of Conversion

Germany and France have strict rules for considering the exchange rate differences, which greatly affect the taxable base. In these European countries, the levy is calculated from the converted amount, not the actual profit of bookmakers. In case of fluctuations, entrepreneurs incur additional fiscal costs.

Restrictions on the Use of Cryptocurrency

In China, India, Algeria, and other countries, there is a ban on transactions in digital money. Malta and Curacao allow payments via such digital assets but with mandatory integration of KYC/AML procedures and a fixed cost of transfers in fiat units.

Besides, the world’s leading gambling jurisdictions perform the following actions:

• impose limits on the storage of profits in cryptocurrency;
• require converting such funds into fiat ones with possible losses in the exchange rate.

Sanctions Regimes

Bookmakers who work or interact with users from jurisdictions subjected to sanctions (for example, Iran, Belarus, Russia, etc.) can be disconnected from international payment systems. Foreign accounts of such iGaming platforms are often blocked, and entrepreneurs lose access to financial instruments.

Cultural Barriers and Money Transfers

National features that each state has do not create currency risks but can exacerbate or indirectly increase their influence on the sportsbook platform.

User Preferences

Thus, gamblers from Japan place bets in Japanese yen, not in dollars or euros. 70% of transactions are made through local systems (Suica or Konbini), as opposed to Visa, MasterCard, Neteller, and other international services.

In Latin America, cash settlements are especially popular. They are made in national currencies (Brazilian reals, Chilean pesos, etc.) through local networks (Boleto and Oxxo).

Players from the USA and Europe expect to receive quick payments in the same monetary units in which they made a deposit. In developing countries, people are accustomed to delays and may agree to conversion.

In some regions (for example, Turkey or Argentina), gamblers do not trust local money and want to use only dollars or euros. Because of this, operators are forced to have multicurrency reserves. It complicates hedging and reduces business liquidity.

It is important for project owners to take into account the local preferences of customers, thereby minimising possible risks.

The Psychology of Betting

With currency fluctuations, consumers may feel that they have been deceived if the withdrawal amount differs from the deposit’s size. In this regard, the number of complaints and the load on the technical support increases, causing serious reputational damages.

An important aspect is the perception of the transfer sum:

• In Asia or the Balkans, people are more sensitive to rounding and “pretty numbers”, especially when converting currencies.
• In Europe, bettors trust fixed prices without extra fees or hidden payments.

Attitude to Digital Assets

In jurisdictions with high inflation (Argentina and Venezuela), such funds are perceived as a real alternative to fiat money. In countries with a stable economy (Germany, Japan, etc.), on the contrary, cryptocurrency is treated with caution.

Bookmakers need to adapt to the cultural context and carefully introduce such a settlement method.

Solutions for Flexible FX Risk Management

Let us consider the most effective tools in the market:

1. Multicurrency accounts. This is the opening of bank or PSP profiles in several units at once (dollars, euros, and pounds sterling). The mechanism allows business owners to pay out prizes to clients in their national currency without losing money during conversion.
2. Financial hedging. The implementation of certain instruments (forwards, futures, options, and swaps) helps to fix the exchange rate, protect projects against inconstancy, as well as plan income and expenditures.
3. Pegging to a stable currency. The use of one reliable type of funds (for example, dollars or euros) for bets and winnings simplifies calculations in bookmakers’ offices. It also reduces the risk of customer dissatisfaction because of the conversion or any changes in the website's payment policy.
4. Reserves. They should be formed in the currencies with which an iGaming platform works. They protect operators from short-term market fluctuations and guarantee immediate payouts to players.
5. Cryptocurrency and stablecoins. Acceptance of deposits in USDT or USDC will ensure fast transaction processing and global coverage of the betting business.
6. Universal payment systems. It is essential to collaborate with providers that convert digital assets upon receipt at a pre-agreed rate. Such a partnership simplifies and speeds up settlements with users, eliminating the need for manual conversion.

An important point is the choice of a jurisdiction with a neutral foreign exchange regime. These can be Curacao, Malta, Costa Rica, the Isle of Man, Antigua and Barbuda, or other countries with a loyal attitude toward this type of transfer.

The legislation of such states guarantees the free exchange and storage of money. Besides, it is distinguished by minimal fiscal control.

The Main Things about Currency Risks in Gambling

Key aspects that entrepreneurs should take into account:

• Entertainment brands face risks due to cash gaps, conversion during transfers, and the use of digital assets with high volatility. The generation of revenues in one currency and payment of salaries or licence fees in another, which also leads to extra costs, is a common occurrence.
• Risk management solutions include hedging, opening multicurrency accounts, and installing universal financial gateways. Operators can create reserve funds and organise the acceptance of bids in stablecoins.

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