Global Betting & Gaming Consultants has released its whitepaper on the crypto gambling industry as it continues to grow.<\/p>\n\n\n\n\n\n\n\n
Over 12 years after the Bitcoin blockchain was first released, crypto gambling has become a popular segment in the iGaming industry and continues to grow.<\/p>\n\n\n\n
That\u2019s why\u00a0Global Betting & Gaming Consultants (GBGC)<\/strong>\u00a0has published a\u00a0whitepaper<\/strong>\u00a0on the segment after going through its history and characteristics.<\/p>\n\n\n\n Crypto casinos first appeared in 2013, with Malta-licensed Vera & John as one of the early adopters, announcing it was accepting bitcoin as a payment option. However, regulatory concerns from the Malta Gaming Authority pushed them to remove the cryptocurrency from the menu.<\/p>\n\n\n\n Today, there are hundreds of gambling websites that have cryptocurrency as a payment option. According to GBGC, bitcoin is the most popular, followed by ethereum ant litecoin.<\/p>\n\n\n\n As the segment gained popularity, the Crypto Gambling Foundation was created and it currently has 14 members: five licensed in Curacao, with the remaining not displaying any licensing information.<\/p>\n\n\n\n The Foundation mantra is \u201cprovably fair\u201d a concept born due to lack of transparency and made possible by the blockchain. Before crypto gambling, random numbers were generated by the host of the game, leaving clients to trust they were not manipulating results.<\/p>\n\n\n\n Fair gaming algorithms were created and contributed to randomisation, removing any possibility of deception or cheating, as it forces the house to reveal their seeds at the end of each game. With these algorithms, players can audit results and CBGC \u201cstrongly believes in widespread use of provably fair algorithms throughout the gaming industry.\u201d<\/p>\n\n\n\n According to CBGC, crypto gambling growth could be growing due to intrusive policies by gambling regulators, which require more checks on customers, their speending and identity.<\/p>\n\n\n\n Curacao<\/strong><\/p>\n\n\n\n The most common jurisdiction for crypto gambling operators to get a license from is Curacao, even though CBGC revealed most websites studied don\u2019t make it clear whether they even have a licence. This would save money for companies, as they don\u2019t pay regulatory and compliance costs.<\/p>\n\n\n\n There\u2019s a perception around the provably fair concept that there could be no need for a licence with proven algorithms. However, most jurisdictions still consider this to be gambling with money, so they expect them to be licensed with all the KYC, AML and social responsability requirements.<\/p>\n\n\n\n The master licensor set up in Curacao seems to be the main reason for its popularity in the crypto gambling space. However, its regulatory situation is changing in 2021.<\/p>\n\n\n\n As the Covid-19 pandemic caused the country\u2019s economy to shrink, they\u2019re looking for help from Netherlands\u2019 Kansspelautoriteit, which had previously criticised the local industry. Therefore, the regulator agreed to give support to its peer, only if it were to change its licensing system to abandon the system of master and sub-licences by March 1. Also, Curacao has to ensure operators \u201cact in accordance with the laws and regulations of the countries they target\u201d by September 1 and the regulator is obliged to ensure all operators pay the requisite taxes.<\/p>\n\n\n\n Such requirements would force crypto gambling companies to comply or leave the country, which would most likely be the case.<\/p>\n\n\n\n Isle of Man<\/strong><\/p>\n\n\n\n The Isle of Man has embraced both blockchaib technology and cryptocurrencies.<\/p>\n\n\n\n It launched Blockchain Isle of Man, a hub dedicated to growing the sector in the island. Moreover, the Isle of Man Financial Services Authority published guidance setting out its position on cryptoassets.<\/p>\n\n\n\n Regarding the gambling segment, the Gambling Supervision Commission offers a B2B Software Supplier licence for token and blockchain platforms and software.<\/p>\n\n\n\n There are several websites licensed in the Isle of Man, including Real Time Games Holdings, Quanta Technology, Eminence Ltd, and Shelgeyr Limited.<\/p>\n\n\n\n Malta<\/strong><\/p>\n\n\n\n The MGA has been studying the segment since 2014 and has conducted several actions lice a \u201ccall for interest\u201d or even the DELTA Summit, a blockchain and digital innovation event.<\/p>\n\n\n\n Moreover, Moneybite has just secured a Virtual Finance Assets license from the Malta Financial Services Authority last May. The Bitcoin payment provider targets iGaming operator, which means good news for the segment.<\/p>\n\n\n\n The regulation of cryptocurrencies, and associated activities, is following a similar path to internet gambling. The early adopters are the smaller, often offshore, island economies, whilst the world\u2019s larger economies are taking a more cautious approach.<\/p>\n\n\n\n The Isle of Man and Malta demonstrate that crypto-gambling firms can take a licence in a well-regulated, high-calibre jurisdiction.<\/p>\n\n\n\n As of mid-2021, however, it is clear that some crypto-gambling firms do not currently value the credibility being licensed can bring.<\/p>\n\n\n\n Users of cryptocurrency might like this stance because one of the appeals of cryptocurrency is that it is decentralised and outside of government control.<\/p>\n\n\n\n This situation might change as the sector matures, jurisdictions like Curacao improve their regulations, and the world\u2019s larger economies decide upon their strategy for cryptocurrency and its associated uses.<\/p>\n\n\n\n The CBGC assessed the multiple benefits cryptocurrencies and crypto gambling bring to cuestomers, including:<\/p>\n\n\n\n An outlet for coins:<\/strong> gambling represents one activity that coin holders can easily spend their coins on, with the added benefit that they might win more coins.<\/p>\n\n\n\n Anonymity:<\/strong> Crypto-gambling sites which hold no licence can be seen as a less intrusive option than regular companies.<\/p>\n\n\n\n Speed of sign-up and transactions: <\/strong>cryptocurrency transactions can be completed almost instantly and can incur lower costs than other payment methods. New accounts can also be opened more easily, partly because fewer checks are conducted on sign-up.<\/p>\n\n\n\n Fewer bet limits & affordability checks:<\/strong> There are generally fewer limits and checks on crypto-gambling sites, although several sites do still have maximum bet limits (varying by coin) and maximum profit limits for some games.<\/p>\n\n\n\n Caters for VIPs:<\/strong> crypto-gambling is better able to accommodate higher-spending VIPs \u2013 indeed, some sites are invitation only \u2013 without restricting bet amounts if a player has some winning bets.<\/p>\n\n\n\n Easier movement of funds:<\/strong> cryptocurrencies offer a means of circumventing capital movement restrictions like China\u2019s, especially if there are difficulties in using traditional payment methods either to move funds or for gambling.<\/p>\n\n\n\n One category of gaming that has been developed specifically for cryptocurrency gambling is crash games. Crash games are fast-paced, easy to understand and compelling to play.<\/p>\n\n\n\n A player places its bet and enters a multiplier they wish to cash out at. Once the game begins, a graph shows the multiplier level rising from 1.00x until it crashes in just a couple of seconds. All bettors with lower multipliers than the one where the game stops win, and all those that didn\u2019t reach their target, lose.<\/p>\n\n\n\n GBGC analysed the performance of one long-standing crash game.<\/p>\n\n\n\n \u2022 Total amount wagered over +\/- 5 years: BTC 825,000 (equivalent to $29.3 billion 7\/2021) \u2022 23 rounds completed One of the main threats for the nieche are governments and regulators and their attitude towards the segment\u2019s development. As the blockchain\u2019s appeal for users is mostly due to anonymity, the authorities are actually concerned about it.<\/p>\n\n\n\n Moreover, Descentralised gambling applications (Dapps) built on a blockchain are the most popular between crypto gambling operators. Their nature when deployed on the Ethereum blockchain includes no owners, free from censorship, anonymous login, encryption, and more, which sparks the government\u2019s concerns.<\/p>\n\n\n\n According to CBGC, governments have hinted how they\u2019d act on crypto, including:<\/p>\n\n\n\n \u2022 Controlling the cryptocurrency mining or creation process \u2013 attempts to licence or tax? Bitcoin is currently the coin most widely used and accepted for crypto-gambling. The price of Bitcoin over the years demonstrates another issue with accepting cryptocurrency as a means of payment \u2013 volatility.<\/p>\n\n\n\n In January 2012, one BTC was valued at $5.5. By January 2021, one BTC was valued at $33,108.<\/p>\n\n\n\n In the first six months of 2021, the value of Bitcoin has been at a low of $29,333 and a high of $63,365.<\/p>\n\n\n\n Banking continues to exert a strong influence on internet gambling, and this is true of crypto-gambling \u2022 Banks have the same concerns as governments and regulators about cryptocurrency \u2013 complying with their AML, KYC and Source of Funds requirements. Owning a bank is an extreme but effective solution for crypto-gambling firms to solve this crypto\/fiat currency problem.<\/p>\n\n\n\n \u2022 But, if that is not an option, a sector is developing to facilitate B2B cross-border cryptocurrency payments and the processing of crypto-fiat\/fiat-crypto transactions. According to the CBGC, the FBI has proven their ability to recover funds from a bitcoin wallet involved in the Colonial Pipeline ransom in June 2021. They seized $2.3 million from a wallet somehow tracking the coins and obtaining the private keys for it, but they didn\u2019t explain how.<\/p>\n\n\n\n The FBI stated that criminals will often use US infrastructure at some stage during their criminal activity, which gives the US authorities the legal ability to act to seize the funds. After a decade of cryptocurrencies, there could be as many as 150 million Bitcoin users worldwide, with 18.7 million Bitcoin currently in existence.<\/p>\n\n\n\n \u25aa There are different methods of trying to calculate the number of Bitcoin \u2018owners\u2019 but the nature of the cryptocurrency means it is very difficult.19 \u2022 Other are traders, buying and selling on the price movements in various coins, but not seeking to use cryptocurrency to purchase goods or services.<\/p>\n\n\n\n \u2022 The market capitalisation of the top 50 coins stands at US$ 1,385 billion (July 2021), although exactly why the coins are worth this valuation \u2013 beyond investor sentiment \u2013 is less clear.<\/p>\n\n\n\n \u2022 Gambling is one activity that holders of coins can spend them on.<\/p>\n\n\n\n \u2022 Hundreds of gambling websites have launched to offer crypto-gambling services, catering for various coins. \u2022 Crypto-gambling\u2019s growth is partly a reaction to the constant stream of new gambling regulation, which seeks to obtain more and more personal information about gamblers\u2019 identity, income and behaviour, and limit people\u2019s spending until the information is provided.<\/p>\n\n\n\n \u2022 For this reason, VIP gamblers find crypto-gambling particularly suited to their needs.<\/p>\n\n\n\n \u2022 Large volumes of coins are clearly passing through these sites. Establishing what fiat \u2018value\u2019 these coins have is difficult, given the volatility in coin prices versus the US$. Some of the larger operators could be earning the equivalent of US$ 300 million in net profit.<\/p>\n\n\n\n \u2022 The traditional tier-one gambling operators do not appear to be promoting crypto-gambling at this stage. There could be a fear as to the regulatory and compliance risk of getting involved with cryptocurrencies. \u2013 The continued demand for decentralised cryptocurrencies as a store of wealth and;<\/p>\n\n\n\n \u2013 The likelihood that governments will not allow cryptocurrencies to remain a source of wealth hidden from the sight of regulators and tax authorities.<\/p>\n\n\n\n Read the\u00a0full whitepaper here<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Global Betting & Gaming Consultants has released its whitepaper on the crypto gambling industry as it continues to grow.<\/p>\n","protected":false},"author":176,"featured_media":20772,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"is_press_release":false,"is_interview":false,"is_opinion":false,"focusai_summary":"Global Betting & Gaming Consultants (GBGC) has released a whitepaper detailing the significant growth of the crypto gambling industry, driven by blockchain technology and 'provably fair' algorithms. The analysis highlights the evolving regulatory landscape across key jurisdictions such as Curacao, Isle of Man, and Malta, underscoring the increasing imperative for robust licensing, KYC, and AML compliance. This shift is poised to reshape operational frameworks and market access for stakeholders in this burgeoning vertical.","focusai_entities":"Global Betting & Gaming Consultants, Bitcoin, Vera & John, Malta Gaming Authority, Ethereum, Litecoin, Crypto Gambling Foundation, Kansspelautoriteit, Blockchain Isle of Man, Isle of Man Financial Services Authority, Gambling Supervision Commission, Real Time Games Holdings, Quanta Technology, Eminence Ltd, Shelgeyr Limited","focusai_location":"Malta, Curacao, Netherlands, Isle of Man","focusai_target_profile":"ceo_executive (0.9), regulator (1.0), compliance_legal (1.0), operator_casino (0.9), affiliate_publisher (0.7), product_ux (0.7), tech_data (0.9), marketing_crm (0.7), payments_fraud_aml (1.0), investor_analyst (0.9), supplier_vendor (0.9), journalist_researcher (1.0)","focusai_suggestions":[{"label":"Curacao Regulatory Impact?","query":"What are the projected GGR and NGR impacts of Curacao's impending regulatory reforms on currently licensed crypto gambling operators, particularly regarding the abandonment of master\/sub-licences and enhanced compliance enforcement?"},{"label":"MGA Crypto Stance?","query":"How will the Malta Gaming Authority's ongoing study of cryptoassets and blockchain technology influence its B2C and B2B licensing frameworks for iGaming operators seeking to integrate cryptocurrency payments or 'provably fair' systems?"}],"footnotes":""},"categories":[153,158],"tags":[23919],"class_list":["post-20771","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-igaming-news","category-slider-home","tag-cryptocurrencies"],"_links":{"self":[{"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/posts\/20771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/users\/176"}],"replies":[{"embeddable":true,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/comments?post=20771"}],"version-history":[{"count":2,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/posts\/20771\/revisions"}],"predecessor-version":[{"id":777017843,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/posts\/20771\/revisions\/777017843"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/media\/20772"}],"wp:attachment":[{"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/media?parent=20771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/categories?post=20771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/focusgn.com\/asia-pacific\/wp-json\/wp\/v2\/tags?post=20771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Crypto gambling and regulation<\/h2>\n\n\n\n
Customer benefits<\/h2>\n\n\n\n
Crash games<\/h2>\n\n\n\n
\u2022 Total Return to players (98.8%): BTC 815,000 (equivalent to $28.9 billion 7\/2021)
\u2022 Gross win (1.2%): BTC 10,000 (equivalent to $355 million 7\/2021)
GBGC recorded the rounds played over a 10-minute period (Bitcoin price = $34,294):<\/p>\n\n\n\n
\u2022 Average players per round: 157
\u2022 Total Bits14 wagered: 742,410 (0.742 of a Bitcoin; $25,460)
\u2022 Highest wagering round: 84,374 Bits ($2,893)
\u2022 Largest individual wager: 45,576 Bits ($1,562)<\/p>\n\n\n\nThreats and issues<\/h2>\n\n\n\n
\u2022 Claiming environmental concerns about the energy-intensive mining process as a reason to restrict or control it.
\u2022 Require cryptocurrency transactions over a certain level to be reported to the tax authorities.
\u2022 Seek to launch their own digital currencies backed by a central bank, as a means of replacing the more volatile decentralised cryptocurrencies.
These measures could curtail the appeal of crypto-gambling to customers and\/or make the operation of crypto-gambling sites more difficult and less profitable.<\/p>\n\n\n\nVolatility<\/h2>\n\n\n\n
Banking and fiat currency<\/h2>\n\n\n\n
too.<\/p>\n\n\n\n
\u2022 Combine this with another activity which banks are wary of \u2013 gambling \u2013 and banking and payment processing are key issues for crypto-gambling.
\u2022 At the Betting on Football conference in 2019, gambling operators on the payments panel believed that the use of cryptocurrencies for the regulated gambling operators is being held back by the fear of losing their conventional banking arrangements.
\u2022 The US Treasury Department will require any cryptocurrency transfer worth more than $10,000 to be reported to the IRS for US citizens.<\/p>\n\n\n\n
\u2022 Coinbase is one company that states its mission as being to \u201cbuild the cryptoeconomy\u201d, which it describes as \u201ca more fair, accessible, efficient, and transparent financial system enabled by crypto.\u201d<\/p>\n\n\n\nConfiscation of coins<\/h2>\n\n\n\n
\u2022 The ability for law enforcement entities to track and seize cryptocurrencies could become a problem for crypto-gambling websites and their customers.
\u2022 Neither operator nor customer can know whether the coin has been earned as the result of criminal enterprise.
\u2022 But a player could find their winnings being seized from their wallet at a later date, if the coins paid out by the operator had previously been used to pay a ransom, for example.
\u2022 Similarly, a crypto-casino could be ordered to forfeit cryptocurrency deposits, if a player has obtained the funds through criminal activity.<\/p>\n\n\n\nConclusion<\/h2>\n\n\n\n
\u2022 Many users simply buy and hold cryptocurrencies as an investment, so are not particularly \u2018active\u2019.<\/p>\n\n\n\n
\u2022 Many of these sites appear to hold no gambling licence but the apparent privacy and anonymity they claim to offer, combined with the \u2018provably fair\u2019 concept, is attractive to a certain category of gambler.<\/p>\n\n\n\n
\u2022 Governments in the major economies are still formulating their approach to cryptocurrencies \u2013 their regulation and taxation.
\u2022 What they decide will ultimately determine the future of cryptocurrencies and associated activities like crypto-gambling.
\u2022 In an era where \u2018global corporate tax rates\u2019 are being muted, there are good arguments for both:<\/p>\n\n\n\n