While reports on the impact of Blockchain tend to focus on cryptocurrency as an investment, Blockchain is affecting a wide range of industries.
The gambling industry itself is poised for a transformation, as consumers seek new, convenient opportunities to play. Here are a few ways that Blockchain is transforming online gambling as we know it.
A number of websites accept cryptocurrencies as a form of payment. Casinos like Videoslots, as reviewed by Casinos Killer, are already accepting Bitcoin. Cryptocurrencies are becoming the main payment system or at least an alternative one. Benefits of this include allowing users to gamble online anonymously. It may let them gamble without creating an account or handing over documentation. Gamblers also gain a much more secure way to collect winnings than cash.
We can expect coins made especially for the gambling industry to show up and offer benefits like lower fees and near instant deposit times. This adds up when you’re dealing with many small and medium payments. Improving the cost-efficiency of financial transfers is a direct cost saving for these sites, which will improve their profit margin. Casinos using cryptocurrencies are able to bypass cash handling commissions, as well.
Gamblers are taking the risk that the cryptocurrency’s value will swing wildly or that cryptocurrencies will be taxed equally. However, British consumers don’t have to worry about whether or not cryptocurrency will be recognized as money. The Gambling Commission already classified cryptocurrencies as the equivalent of money. The Isle of Man has taken it one step further and accepts cryptocurrencies as legal tender.
In some cases, crypto-currencies lower the bar for entry for new gamblers and may let them circumvent gambling regulations that apply to regular currencies. For example, someone could use Bitcoin to gamble online, even though gambling is banned in their country.
Casinos in the UK are required by law to ask players to prove they have sufficient funds when depositing money into an online account. Crypto-currency lets them gamble anonymously without providing this information. This does raise questions regarding age-checks and self-exclusion facilities, where someone signs up to be prohibited from being allowed to gamble due to a prior history of compulsive gambling.
The low cost of entry into Bitcoin gambling led CEO Ivan Montik, head of a company specialising in casino software, to admit he’s seen several hundred requests for Bitcoin casinos over a single six-month period. He said his company was in the process of setting up several such sites at any given time and was limited only by its manpower.
Note that British gambling sites are obligated to comply with the Gambling Act 2005, whether or not the British market is their target audience. Even online gambling sites based in the UK seeking to serve foreign markets must comply with the Act.
Online casinos are prone to a lack of transparency. Gamblers don’t know if the casino is actually playing by the rules. This hurts online gambling sites since it prevents many potential customers from using their sites.
Blockchain transactions automatically create a record that cannot be changed. Transactions cannot be copied or deleted. This allows users to verify that transactions have actually taken place. Cryptography thus makes it possible for sites to show that they are, indeed, honest. And because all of these transactions are not held in a central place like a bank, anyone can verify them. Blockchain provides provable fairness, meaning that all lottery entries and pay outs are verifiable, viewable, and fair.
This transparency may be a boon to online casinos that labour under strict and heavy regulation. There may be future restrictions on the use of cryptocurrencies in gambling, but it is more likely we will see new regulations to minimise potential breaches of license conditions, prevent money laundering or the bypassing of social responsibility requirements.
Decentralized Gambling Platforms
Blockchain makes it possible for almost anyone to become a member of the casino. A few platforms let people invest cryptocurrencies in the gambling establishment or website. That’s aside from several decentralised sports betting platforms that already employ a Blockchain network.
Prediction markets existed before Blockchain, but they are being enabled by Blockchain’s decentralised platforms that also bring a measure of trust back to prediction markets. Now there’s more transparency regarding the data from event outcomes introduced. And the open nature is allowed for far more complex forecasting models to be created. The more advanced forecasting models leverage neural networks, users, and data mining to create very accurate forecasts. And they reward token holders quickly.
The transparency Blockchain brings allows players to verify whether or not lottery winnings are being distributed fairly and to verify they are paid out after all. For example, players may not be able to verify today that an online lottery actually pays anything to anyone. Blockchain records answer that question.
The anonymity provided by cryptocurrencies and Blockchain is a boon for security. Since gamblers never have to input their personal details to gamble, the risk of personal data theft is eliminated. And hacking is certainly a threat when you’re dealing with centralised networks like online casinos. Note that use of Bitcoin or another cryptocurrency doesn’t completely eliminate the risk of hackers hacking into the network’s security system and taking everyone’s funds. The relatively limited use of cryptocurrency may provide a measure of protection since those draining your account of cash may not be able to transfer Bitcoin. We can say that cryptocurrency offers greater protection against online fraud but doesn’t completely eradicate it.
If Bitcoin ends up more stable in value than other currencies, that’s an extra layer of security. However, there is the risk that the rise of alternative cryptocurrencies reduces the value of Bitcoin due to the competition.
Bitcoin gambling is still a small fraction of the online gambling industry, but its advantages make it a sure bet for future growth. Experts are predicting that Blockchain’s transparency and provable fairness are going to lead to widespread adoption. We can predict that regulations will need to adapt to suit the new technology. And technology itself will evolve to enable auditing, monitoring and record keeping for every part of the supply chain from players to site operators to the games themselves.