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With a few Bitcoin-powered online casinos popping up every now and then, I am wondering where they are hosted and if they operate legally in the given area?

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This is sort of a general question, so to simplify I'll pick a specific example: SatoshiDice.com

SatoshiDice itself

does not list their location.

DNS

A whois lookup shows that they host their DNS with a company called Public Domain Registry. Using their whois lookup shows that the domain name is registered to privacyprotect.org

Jurisdictions

Public Domain Registry: Beaverton, Oregon, United States
Privacy Protect: Claim an address in Austrailia, but also have a telephone number that begins with Denmark's country code.

Hosting

Their IP address resolves to 54.247.163.243, which is part of a /16 allocated to Amazon, and reverse DNS shows that it is part of their elastic compute cloud. The ARIN/amazon.com whois/amazonaws.com whois all have mailing addresses in Seattle. However, the servers are not located in seattle. A traceroute shows that this ec2 server is hosted in their eu-west-1 region. (i.e. Ireland)

Jurisdictions

Amazon: Seattle, Washington, United States
Amazon's servers: Dublin, Ireland

Conclusion

Maybe. What I know about international law could fill a thimble. But if you wanted to shut them down, there are a lot of jurisdictions that you could attack them in.

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SatoshiDice is hosted in Ireland because online gambling in Ireland is not illegal and you don't need a license. – Lloyd Feb 1 '13 at 11:54

A popular jurisdiction for BitCoin casino hosting is Curacao which is a gaming friendly jurisdiction.

You can read some more informaiton here: bitcoin gambling hosting

So I believe that answers your "Where do they host" question.

Now, is a bitcoin casino legal or not?

This depends on the "currency" being used and what people are wagering with. If you were gambling using match sticks, pebbles or broccoli, it would be perfectly lawful since Governments are only concerned about taxes, revenue and more taxes and match sticks, pebbles and broccoli are of no economic interest to them.

A bitcoin is much like broccoli, it is not recognised in most jurisdictions and you will definitely not find any legislation regulating its use with gambling and even if it were regulated in some way, it would be almost impossible to "regulate".

My advice, if you are going to setup a BitCoin casino, do it in a Gambling Friendly jurisdiction such as Curacao and if your Casino becomes a bitcoin phenomena and become profitable, get a license - this will allow you to use some of the more traditional currencies and will give you the respect you deserve.

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I`m quite sure, that all casinos are hosted on offshore location. Here you can find some of the botcoin hosting companies that offers offshore locations: https://en.bitcoin.it/wiki/Trade#Web_Hosting

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