Despite receiving a lot of flak from regulators, use of crypto is still limited when compared to fiat within the illegal gambling sector.
Last week, a report claimed that cryptocurrency-based illegal gambling has surged in many parts of Asia owing to the rise of this novel asset class in recent years. In this regard, the article further added that over the course of the last five years or so, betting amounts have become substantially larger, partly because of traditional payment methods being replaced by cryptocurrencies.
From a more technical standpoint, a research study released by Transparency International, a nongovernment organization based in Berlin, Asia’s illicit gambling market was found to be worth a staggering $400 billion in 2018. This is in part because gambling is an extremely popular recreational activity across a number of countries in the region such as China, India, Indonesia, Pakistan and Bangladesh.
Additionally, cryptocurrencies are becoming a preferred source of betting for online gaming operators around the world because the payment medium works without the need for an intermediary. Additionally, it alleviates the risk of customers initiating fraudulent credit card chargebacks, which take place after a scammer has topped up their betting account but then request their credit card operator to process a refund by citing illegal activity.
Crypto use in gambling is still limited
Even though online gambling has grown considerably across Asia as well as many other parts of the world recently, the use of cryptocurrency within this domain is still largely contained to some comparatively small, little-used gambling decentralized apps.
Licensed operators only take bets in countries where online gambling is legal. So, it is entirely possible that players using cryptocurrency to engage in illegal gambling only represent a tiny fraction of the market.
Sulim Malook, founder of Crypto Millions Lotto, a licensed Bitcoin (BTC) lotto, told Cointelegraph that a vast majority of Asia’s gambling activities are regulated and not related to its local sporting market. Instead, people prefer to bet on a number of western sporting domains, such as the English Premier League or the Spanish La Liga. He further highlighted:
“You can get an idea of how big this is just by looking at the number of sponsorships clubs have with sports betting partners. Players from countries like China, India, Indonesia, Pakistan and Bangladesh can open up betting accounts legally at many online bookmakers, including the world’s largest, www.bet365.com. They don’t need cryptocurrency to do this. In fact, Bet365 doesn’t even offer cryptocurrency as a direct means to deposit.”
When asked about why so much of the blame was being placed on crypto even though fiat-based illegal gambling is still thriving, Malook stated that a large portion of the bad publicity is happening because it is easy for government officials and regulators to point fingers at this industry, especially since it is still in its infancy.
He further pointed out that even though Bitcoin is well known for its censorship-resistant nature, most people — especially those living in developing nations — like to view the digital asset as a global currency that can allow them to take advantage of services that people in most western nations take for granted. Mulook then added:
“Card issuers have made it so difficult for people to gamble (deposit and withdraw) even when the transactions are legal. As such, it is not surprising that people are looking for alternative currencies and payment methods. Cryptocurrency is an excellent facilitator for online gambling, which is a huge industry even without it.”
Fiat still accounts for a majority of global illegal gambling activities
To gain a better understanding of how fiat compares to crypto in relation to illegal gambling, Cointelegraph spoke with John Caldwell, co-founder of ASG Blockchain and director of advocacy of CasinoCoin Foundation. CasinoCoin is a digital currency designed specifically for the regulated online gaming industry.
In his view, an overwhelming majority of funds being passed back and forth across a host of illicit gambling markets is still fiat-based money. However, he did concede that with the introduction of crypto into the fray, the existing problem might be exacerbated, albeit quite marginally.
On the issue of whether the increasing use of crypto — for online gambling purposes — gives governments all over the world a good enough reason to ban this unique asset class, Caldwell pointed out:
“Methods to support illicit gambling via fiat have been tried and true for decades now, and the tools that blockchain and crypto provide to battle this should be the focus. Will politicos/governments figure this out? I am hopeful, but we shall see. Given the direction of governments toward national digital currencies, one would hope a government would see that using a digital currency and its supporting tools to shed more light on all transactions is the answer.”
Lastly, the privacy benefits related to most crypto assets are quite limited unless people are looking to get their hands on privacy-oriented digital currencies — most of whom are anyway very difficult to use due to various regulatory problems. In regards to the subject, Malook pointed out that every licensed exchange that is currently offering its customers seamless fiat-to-crypto conversions is making use of rigorous Know Your Customer checks. For those who want to bypass such KYC requirements, the cost is having to pay very high fees and currency conversion spreads that seriously impact a gambler’s overall market edge.
The key to crypto gambling is to bring more clarity to the entire process
Despite the anti-crypto gang reiterating the mantra that “crypto is untraceable,” the fact of the matter remains that most cryptocurrencies are actually more traceable than cash. And while the growth of the illegal gambling market should be a reason for concern to regulatory bodies across the globe, putting the blame largely on crypto does not help solve anything.
Commenting on the issue, Brandon Morey, CEO of We Accept Cryptocurrency, an online resource of merchants, told Cointelegraph:
“I don’t believe illegal gambling will ever be curbed or contained since a whole lot of people like betting on sports. In fact, illegal gambling markets will only grow due to technological advances.”
On a somewhat similar note, Caldwell pointed out that the key to unifying the crypto and gambling world is by bringing more clarity to the entire betting process. In his view, hiding or trying to obfuscate any part of this process will only draw in negative attention toward all of the involved parties. Caldwell further opined:
“Crypto and blockchain should facilitate that process and make players, operators, regulators and governments all more comfortable — not less. The key is educating polls, regulators and operators on how blockchain and crypto can be used to make their lives easier — not more difficult. The blockchain should be seen as a tool — not a threat.”
All in all
As things stand, cash and credit cards are still by far the preferred mode of payment for most gambling enthusiasts across the globe. This is because, despite crypto eliminating the need for any gateways and intermediaries, digital currencies are still hard to use for a whole host of day-to-day buy/sell activities.
Add to this the fact that most traditional credit card operators provide their users with financial guarantees that crypto just cannot provide at the moment. As a result, the overall incentive for people to use crypto for legal or illegal gambling-related activities is quite limited.
Source: Cointelegraph https://cointelegraph.com/