Just from 2019 to 2024, the crypto gambling market has grown from a $50 million to a $250 million industry, representing 5x growth in just 5 years.
Cryptocurrency gambling software is undoubtedly attracting more attention from customers and regulators alike, and the majority agree that fair play measures and regulations are necessary to maintain sustainable development in the future.
However, there remains some dispute as to whether crypto represents the future of the industry, or if it’s destined to remain a niche market for the foreseeable future.
Benefits of Gambling With Cryptocurrency
Gambling with cryptocurrency undoubtedly has its benefits. Below, we’ll cover some pros of online crypto casinos.
Anonymity and Privacy
Gambling with casino crypto currency offers a level of anonymity that traditional banking options can’t offer. Traditional payment methods require personal information that makes transactions traceable. All the popular gambling cryptocurrencies allow players to maintain privacy, with some platforms allowing no-KYC sign-ups.
Speed of Transactions
For online gambling, blockchain technology makes transactions near-instant in some cases. Some traditional options, like bank transfers, can take up to two entire weeks. It’s no secret that instant access to funds also makes gamblers more responsible in their gaming habits.
Lower Transaction Fees
At every online casino, crypto-currency transactions come with zero additional fees. This is because intermediaries are eliminated. Bank transfers, on the other hand, can cost upwards of $50 per transaction.
Larger Bonuses
The lack of fees isn’t something only players can take advantage of. Online casinos can use this benefit to offer their users larger bonus sums. This is clearly evident from how some crypto casino sites offer match rates of up to 600% while only giving a 100% match for fiat deposits.
Extra Security and Fairness
Blockchain technology, while still seen as a new tech, is far more secure because all wagers and transactions are transparently recorded, which reduces the risk of fraud.
A major development in the Bitcoin casino software sphere came with the introduction of provably fair games, which use cryptographic algorithms to verify game outcomes, and that players can access to verify the fairness themselves.
Impact of Decentralized Finance (DeFi)
The rise of decentralized finance (DeFi) brought new opportunities when it comes to online casino software crypto players can use. DeFi protocols enable innovative financial products, like decentralized betting pools, for example. In this case, players can earn interest on their funds.
Global Accessibility
This one is obvious but still needs a mention. Crypto breaks down geographical barriers, which allows players from across the globe to access online casino games without the hassle of exchange rates or banking restrictions.
Drawbacks of Using Cryptocurrency for Gambling
If the world of Bitcoin and gambling was so perfect, we probably would have switched to it 100% by now, considering that some of the leading crypto casinos have been around for 10+ years. So let’s cover some of the downsides of cryptocurrency gambling.
Volatility
The value of cryptocurrencies like Bitcoin and Ethereum can swing by as much as 10% in a single day. And that will affect the actual value of winnings and funds held in crypto. Such a level of unpredictability can lead to financial risk or simply uncertainty that’s not good for mental health.
Technological Barriers
Crypto gambling requires some technical knowledge, nothing complex but enough to make the less tech-savvy players drop out. The process of acquiring, storing, and transferring crypto includes wallet management and understanding blockchain technology.
This learning curve certainly discourages some potential users from crypto gambling. Also, any mistakes while handling cryptocurrencies can result in irreversible financial losses.
Regulatory Concerns
The legality of cryptocurrency gambling varies a lot across different jurisdictions. China and India have pretty stringent restrictions on both cryptocurrency use and online gambling. This adds a tinge of uncertainty to the entire industry, and that’s certainly a downside.
Security Risks
Blockchain tech comes with inherent security, but that doesn’t mean crypto gambling platforms are bulletproof when it comes to cyber threats. In 2023, a group of hackers stole $41 million from the popular online casino Stake. While these things also happen at traditional online casinos, the authorities tend to react faster in that case.
Limited Acceptance
The crypto gambling industry is growing but it’s still a niche market. So if you were thinking about using Bitcoin or any altcoin at major gambling platforms, you can still pretty much forget about it.
Crypto Gambling Regulations
For the most part, crypto gambling remains in somewhat of a gray area in most countries worldwide. It’s a common theme that cryptocurrency casinos fall under the general gambling laws of a country, which leaves a gap for offshore casino sites to enter the space. A few notable examples are:
- United States: Gambling using Bitcoin is not regulated at the federal level in the US, which means each state must decide for itself. The Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 restricts the operations of online gambling platforms but does not specifically address cryptocurrencies.
States like Nevada and New Jersey allow online gambling, whereas Utah and Hawaii prohibit all forms of gambling. Offshore platforms often serve U.S. residents, but these are not regulated by US laws. - United Kingdom: The UK Gambling Act 2005 regulates all gambling activities nationwide, including crypto gambling, and is overseen by the UK Gambling Commission. Operators must adhere to strict standards and obtain licenses.
- Canada: Each province regulates gambling activities in Canada and there is no federal prohibition on crypto gambling at the moment. Some provinces have embraced online gambling, allowing the use of cryptocurrencies with the Criminal Code of Canada governing all gambling activities in the country. Provinces still have the autonomy to regulate online gambling within their territories.
- China: Under Chinese law, all forms of gambling and cryptocurrency transactions are illegal, with the exception of government-sanctioned lotteries and activities in Macau. The Cyberspace Administration of China has also issued regulations prohibiting financial activities involving cryptocurrencies.
- Malta: Known as a major gambling hub, Malta allows all types of gambling, including crypto and the Malta Gaming Authority regulates the industry under the Gaming Act 2018. The country has been proactive in integrating blockchain technology into gaming, with specific regulations for Virtual Financial Assets (VFAs).
Positives and Negatives About Crypto Gambling Regulations
The question of regulating the crypto gambling industry is complex, and you will get different answers depending on the crypto casino developer you ask. But overall, we believe a few objective points can be drawn here.
Positives of Regulating Crypto Gambling
- More Consumer Protection: Regulation provides a safety net for consumers, plain and simple. For example, the UK Gambling Commission has strict guidelines for all operators to adhere to minimize the risk of fraud. Players want to feel safe.
- Greater Market Stability: Clear regulations make every market more stable because operators have guidelines to follow. This reduces the risk of market manipulation and scams. In Malta, the Gaming Act 2018 gave specific requirements for all casino operators to enter the market.
- Industry Legitimization: Regulations can legitimize the use of cryptocurrencies in gambling, which is likely to encourage wider acceptance and adoption.
- Tax Revenue Generation: This is a significant benefit because a $250+ million global market has the potential for significant tax revenue. This is evident in jurisdictions like the UK, where the gambling industry is heavily taxed, which delivers a steady stream of income for public services.
Negatives of Crypto Casino Regulation
- Stifling Innovation: Some proponents of crypto gambling point out that strict regulations can hinder technological advancements and innovation within the sector. Operators might find it challenging to introduce new blockchain technologies if they are constantly navigating a complex regulatory landscape. This is obvious in countries with rigid financial laws like China.
- Inconsistent Regulations Across Borders: Different countries have varying regulations, of course. That creates confusion and potential difficulties for operators looking to expand internationally, and crypto is a global currency. For example, the Unlawful Internet Gambling Enforcement Act (UIGEA) in the US does not directly address cryptocurrency and creates regulatory discrepancies.
- Increased Operational Costs: Compliance with regulatory requirements can increase operational costs for gambling platforms. In most cases, these costs are passed on to consumers through higher fees or less favorable odds.
- Potential for Overregulation: There is always a risk that too much regulation could drive consumers towards unregulated or illegal platforms, where there is less protection. This is particularly a concern in regions where gambling is heavily restricted.
Future Trends for Cryptocurrency Casino Platforms
As the tech is evolving, many crypto casino developers are expecting decentralized finance (DeFi) to make an impact on online gambling. And with the integration of smart contracts, we may see automated payouts and enhanced fairness in gaming outcomes.
We think it’s safe to say that regulatory changes will occur as governments and financial institutions start recognizing the potential benefits and challenges of crypto casinos. The optimistic take is that this will lead to more standardized frameworks to legitimize and stabilize the market.
The market growth for cryptocurrency casinos is projected to accelerate, overall, as evidenced by the ever-increasing demand for digital payment options and the global rise in online gambling.
We will keep you up to date as these trends develop. In our opinion, cryptocurrency casino solutions will likely become more mainstream and will carve out a larger niche for itself in years to come, at the very least.
Blockchain Gambling: Conclusion
That would be all for this one. The world of gambling blockchain is evolving and its rise comes with new opportunities and challenges.
The essence of the article on our page was to summarize the existing state and look into the future in a bid to draw attention to the actions that might be required in the online gambling industry.
If you are considering joining online crypto casinos, please research and stick to the more reputable options with years of experience and a track record of positive reviews.
Stay safe always!
