Many have hailed cryptocurrency as the payment revolution we’ve all been waiting for. As a decentralised payment method offering multiple benefits, like greater privacy and cutting out the middleman, it’s considered by many as the fairer and more secure way to pay and play or bet at gambling sites. But is it primed to become the future default payment method for the online gambling industry? Let’s take a look!
Crypto explained
If you’re unfamiliar with crypto, it is a blockchain-based, decentralised payment system. It includes multiple currencies that exist virtually, like Bitcoin, Ethereum and Litecoin. The technology behind it, Blockchain, is a digital system of recording and tracking payments.
When a transaction is made, it’s verified by users and added to the blockchain, which serves as a public ledger. Transactions are identified by public keys, keeping the users anonymous. Bitcoin was the first crypto created in 2009, but there are now multiple coins, each with its benefits; for example, some coins process transactions faster than others.
Benefits for gamblers
There are multiple benefits to using cryptocurrencies at the best slot sites. These include:
- Decentralisation: As a decentralised currency, no authority or government regulates crypto payments or the data behind each transaction. For users, this means low transactions as crypto is self-maintained, with users verifying transactions, not a bank. Essentially, no intermediary is taking a cut or recording your details. However, this does mean if there’s a mistake, there’s nobody to come to the rescue; the transfer is final.
- Data transparency: Using a public ledger means that the data is transparent; any cryptocurrency user can track changes made in the database for the coin they hold.
- Privacy: As a decentralised currency, anonymity is guaranteed by the advanced encryption used in blockchain technology. It’s even possible to find crypto-gambling sites that allow players to sign up using just their email. To conduct payments, you only need to share your wallet details with the casino. Limiting the amount of data transmitted arguably keeps things safer.
- Almost impossible to hack: No one can make changes to the blockchain without an access code, which makes crypto practically impossible to hack.
- Fast transaction speeds: Crypto is the quickest payment method on the casino floor, with transactions taking seconds.
- Allows wider access to gambling: As crypto is not recognised as a legal tender in some countries, it’s not classed as real money gambling, making crypto gambling sites more widely available to players – and there are no currency conversions!
Why haven’t all online casinos adopted crypto?
While it might seem that crypto is the perfect casino payment method for multiple reasons, the uptake in regulated gambling markets has been slow due to numerous factors, which include support from casino developers, local government regulation and the fact that crypto is highly volatile, with the value fluctuating, sometimes wildly.
In the case of the UK, crypto is not an accepted casino payment method, and there are few signs that it will be anytime soon. In fact, rather than becoming more liberal regarding payment methods, the UK is going in another direction.
For example, in 2020, the UKGC banned credit card use in gambling at UK-licensed casinos and sportsbooks, leaving players to use debit and e-wallets (which must not be funded by a credit card if used for gambling). The UK-wide ban on credit cards in gambling was based on research conducted by the UKGC, which showed that a disproportionate number (22%) of those who used credit cards were problem gamblers. At the time, then Gambling Commission chief executive Niel McArthur said:
‘“Credit card gambling can lead to significant financial harm…The ban is part of our ongoing work to reduce gambling harm. We also need to continue the work we have been doing with gambling operators and the finance industry to ensure consumers only gamble with money they can afford to spend.”
While crypto isn’t gambling with money consumers don’t have, it’s unregulated. It, therefore, contradicts EU-wide and UK Anti-Money Laundering and Source-of-Funds checks that licensed casinos are bound by (breaking AML regulations is serious business, in 2022, Entain was fined a record-breaking £17 million by the UKGC). With heightened privacy and anonymity features, crypto cannot be guaranteed as crime-free funds; hence, it’s difficult to imagine a future where UK-licensed gambling sites are able to offer this payment method. It’s for this reason that the majority of online crypto casinos seek Curacao e-Gaming licensing.
Furthermore, with affordability checks the buzzword across 2022-23 for UK gambling, things are tightening up, not loosening in this respect. The industry is also keenly awaiting the publication of the new government White Paper, which is set to introduce some form of affordability checks and/or per-player budget (this has already seen some UK-licensed operators, like Flutter Entertainment, introduce early mandatory budgets for some players).
While there are many benefits to using crypto for gambling from the perspective of gamblers and those who are enthusiastic about the crypto industry, it’s not problem-free. Along with the issues of money laundering and possible crime association, crypto is unstable. The recent huge devaluation of many cryptocurrencies and the subsequent bankruptcy/implosion of several crypto companies, including FTX, Three Arrows Capital and Celsius Network, demonstrates this well.
Aside from attesting to the instability of crypto due to rumours of market manipulation, it also proves it a less than egalitarian payment method (many have argued that crypto redistributes financial power by being user-maintained and decentralised).
A further issue caused by crypto casinos’ offshore, unregulated nature is that it risks player safety. While the payment system may be secure, there are few guarantees over the casino and games software when playing at an offshore casino. What’s more, crypto is yet another way self-excluded players, or those that have gone further and enacted a banking block on gambling transactions, can defy these limits. More recently, the safety and regulation concerns around crypto casinos has even seen the popular streaming network Twitch ban crypto casinos.
While crypto may seem ideally suited to gamblers, it’s not a match with the current regulatory framework in the UK or Europe. With ever-tightening regulatory controls on gambling coming into place across the continent, it also seems unlikely that it will be regulated within the formal market anytime soon, which given the most recent set of shocks to the crypto market, might be best for players.
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