Bitcoin’s Potential in the Online Gambling Market

Online gambling makes up 8% of the overall gambling market, which was valued globally at $28.54 BN in 2012 and projected to grow 9.13% annually through 2015. Bitcoin currently accounts for a small percentage of online gambling revenues, however cryptocurrency-based gambling firms are attempting to take advantage of the enormous potential for Bitcoin within this market due to the low cost and speed of transactions.

SatoshiDice, an early Bitcoin betting site is credited with approximately half of the transactions on the Bitcoin network being used to transmit bets via the website. Further analysis reveals that the majority of these transactions are small, indicating that the transaction of many small values is a strength for the crytpocurrency. Ivan Montik, CEO of SoftSwiss, a provider of online casino software that can support Bitcoin gambling confirms that the demand is there.

We’ve got about 400 requests for the launch of a bitcoin casino in the last six months…We constantly have three to five casinos in the set-up phase, and could have had more if we had more resources.”

Due to strict gambling laws in the United States, cryptocurrency has struggled to break into the online gambling market. SatoshiDice does not operate in the US market in order to avoid the high regulations. The 2006 Unlawful Internet Gaming Enforcement Act made the processing of online gambling payments via US banks illegal. However, despite such restrictions, Bitcoin is beginning to find its place among online gamblers though websites designed to use the virtual currency. Seals with Clubs is an online Bitcoin-based poker system designed to avoid the use of national banks. According to the site’s manager, Byron Micon,

It would be trivial to circumvent some ban. Seals is open to the world. There’s no banking at all done on the site. It’s a pure bitcoin poker site, so this is a totally brand new thing…It’s only been a few years for the legal world and there’s nothing at all that says anything about this protocol.”

The success of such sites is predicted to brave the way for a more open environment for gambling sites using virtual currency. However, despite the success of various entrepreneurial startups, experts see plenty of challenges ahead. Legislation, marketing, and security are all seen as potential problems for crypto-gambling sites. However, the uptake of Bitcoin as a whole is considered the primary challenge to such a market. Leandro Rossi of Cloudbet, a sportsbook and casino site, elaborates,

 There is still a high educational barrier to entry. People can transact with Visa and MasterCard without understanding how the payment network works, but to transact with bitcoin there is still a requirement of technical knowledge.”

While there remain a number of challenges to overcome, it seems states are beginning to adopt less restrictive regulations regarding online gambling, including recent allowances of the practice by Delaware, New Jersey, and Nevada. Experts consider huge potential for Bitcoin in the online gambling market, however progress requires further acceptance of Bitcoin, as well as developments to ensure legislation is adequately met.

 

Read more here- “Why Bitcoin’s Gambling Boom is Only Just Getting Started,” (Danny Bradbury, CoinDesk)

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Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.

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