Crypto and Sports Wagering: Don’t Bet Against It
After a May Supreme Court ruling cleared the way for expanded sports betting in the U.S., more states are moving toward legalization. Where do cryptocurrencies stand in all this? Bitcoin and others have gained some acceptance in some jurisdictions as well the murky world of offshore wagering.
While there seems to be growing acceptance among gamblers and some operators, what’s the future and what do gamblers have to gain from wagering crypto? As soccer season kicks off in Europe and football season approaches in the U.S., more bettors may be laying the favorite using crypto.
Despite volatility among Bitcoin and some other cryptocurrencies, many remain bullish on the digital currency and that includes some who want to drop a few coins at the virtual betting window. India’s government is considering legalizing sports wagering and appears on board for crypto transactions.
In July, the government released a legal framework of how sports betting would operate. The proposal noted: “Gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, Virtual Currencies (VC – also known as Cryptocurrency), etc.”
But with the anonymity of digital currencies, the idea of “legalized” sports wagering become gray as far as bettors are concerned. Numerous online sports books already accept crypto such as Sportsbetting.ag, which accepts Bitcoin, Ethereum, and Litecoin.
In the Internet wild west, plenty of sites offer action to players of virtually any country. Eric Thies is a crypto market analyst with UTR Equities, a financial education service, and he believes sports books will have no option but to accept cryptocurrencies even in legalized and regulated jurisdictions.
“Cryptocurrencies have been a great option both for bettors and casino groups in the space, even prior to legalization,” he says. “This will add even more interest from a wider range of people with how easy cryptos make it to to play sports action.”
Crypto makes some aspects of sports wagering so easier, Thies argues, including depositing into an account and getting payouts quicker.
Paulius Mikaliunas, head of operations at CoinPoker, a blokchain based online poker platform, agrees that cryptocurrencies give gamblers global accessibility and instant payouts, which are invaluable to sports betting operators and fans in particular.
"Our team embraced the benefits of crypto to address limited transparency and bureaucracy in traditional online poker, but the opportunities of crypto wagers are applicable to all gambling services and sectors," Mikaliunas said.
According to him, one example beyond the obvious benefits of crypto transactions is applying cryptographic functions to develop a decentralized RNG (Random Number Generator).
"Our team is currently in the final stages of implementing this on CoinPoker, and it will allow players to view their impact on deck order without any risk to us as room operator. This tech could be adapted for any gaming service that employs an RNG, and is just one of many ways this versatile tech can revolutionize the gaming industry," Mikaliunas explained.
A new economy
Ben Godfre is a general partner with SportVEST, an asset-backed digital token built on blockchain technology and linked to the performance of the company’s venture fund portfolio. He’s interested in seeing how the market plays out, but sees crypto in its future.
“These new laws will create a whole new economy while putting daily fantasy sports companies under a lot of pressure,” he says. “We have already seen the acquisition of Fanduel by Betfair and are likely to see many more merger and acquisition deals over the coming year.”
He sees numerous positives in crypto betting – and one stands out for operators. Blockchain allows for a transparent ledger of betting transactions and increases providers’ security from hackers.
While it’s still early, Godfre sees companies accommodating to crypto, and Europe as the hope to expand the market.
“Blockchain technology and crypto have a part to play over the medium term in sports betting, but to date no company has successfully managed to integrate the two,” he says.
“While there are startup companies currently developing this, it is likely a traditional betting European company will be the most successful crypto sports betting option purely because they already have a huge user base, existing tech framework, and unlimited budget for both development and marketing. The future of sports betting is definitely a tokenized blockchain model.”
Achieving a more accepted crypto betting model won’t be easy. Marc Edelman is a professor of law at the Zicklin School of Business at the City University of New York, and gaming/fantasy sports law is one of his specialties. Edelman notes that American companies have great risks involved when it comes to the anonymity factors associated with cryptocurrencies.
“There might some companies out there that choose to accept Bitcoin because they believe there’s a value in doing so from a business perspective,” he says. “However, any company that’s seeking to offer online gaming using Bitcoin would be troublingly confused if they believe there were any legal advantages. Irrespective of whether a company were to use Bitcoin for online gaming or traditional currency, these activities would be seen as wagering and the exact same set of federal and state laws would apply.”
Foreign sites catering to American players using crypto or some other form of deposit also face possible legal entanglements.
“Each company that does business in the United States is subject to long-arm jurisdiction of the states in which they operate and the U.S. overall,” he says. “Fundamentally, it makes no difference if a company is based in New Jersey, Texas, or Panama. To the extent that are doing business and targeting customers within the United States, they’re subject to the law in every state in which they have customers as well as the laws of the U.S.”
While offshore companies accept American customers, Edelman says those companies face legal liabilities and owners could ultimately be extradited if prosecuted. The means of currency is irrelevant.
Godfre and Thies both agree there are significant challenges for casinos, but that crypto is too easy of payment method and companies and government regulators will adjust.
“Casinos will want to be at the forefront and take advantage of an additional huge revenue stream,” Godfre says. “We will see casinos eventually offering some kind of crypto sports betting, which will be either through a proprietary software or through a strategic partnership with a large betting company.”
FanDuel has already put a toe in the water. During the NFL playoffs in January, it hosted the Bitcoin Bowl Free Play, a winner-take-all freeroll that paid one BTC to the winner. It also hosted a USD 3 event paying out a total of three BTC to the top four places. Considering the price was still above USD 10,000 by Jan. 31, the winners took home a nice payday.
Disclosure: Among advisors of CoinPoker is Antanas Guoga, Member of European Parliament, a serial entrepreneur, investor, and backer of Cryptonews.com.