The rise of the free and open Internet since the early 1990s has led the gambling industry to expand its reach further into new markets. Despite strict and heavy regulatory policies, online gambling firms have managed to comply with a seemingly endless barrage of tighter gambling laws. Likewise, new payment systems have emerged that provide easier ways to lure people into making more bets. One such scheme is the introduction of Bitcoin, which is an open-source system using peer-to-peer technology for online payments. This type of payment system has the ability to bypass certain restrictions in online gambling all over the world, making it a potentially profitable betting tool for online casinos and gamblers.
The advantages of using Bitcoin involve its steadily growing status as a cost-efficient form of cryptocurrency. The main benefit focuses on the cost of making a Bitcoin transaction. Since it is relatively cheap to make a single transaction, more operators are exploring the idea of using them. Bitcoin’s affordable transaction prices contribute to the existence of a viable business model that offers low commissions. Although Bitcoin gambling represents a small fraction of the revenues from online gambling, the industry is pushing to make it more mainstream due to its cost-efficiency.
In 2012, the global market for online gambling recorded €21.73 billion in gross winnings, according to research firm H2 Gambling Capital. By 2015, a 9.13% compound annual growth rate is expected to occur, the company said. This projection is supported by the growing number of demands from consumers to launch new types of gambling platforms such as Bitcoin casinos. SoftSwiss CEO Ivan Montik is one of those that has felt the increase in demand. Montik’s company specialises in online casino software and bitcoin gambling solutions. “We’ve got about 400 requests for the launch of a bitcoin casino in the last six months,” he added. “We constantly have three to five casinos in the set-up phase, and could have had more if we had more resources.”
Other groups such as online sports betting site BitcoinSportsbooks.com have already expressed their confidence in the arrival of Bitcoin as an innovation in online gambling. “The smart money is on a Bitcoin gambling revolution,” according to the website. “It’s time for gamblers to cash in their chips and start mining their Bitcoins because cryptocurrency is about to make conventional money a spent force in gambling.”
Bitcoin may be receiving a lot of hype, but several challenges still face the peer-to-peer technology. As mentioned earlier, regulation will play a key role in the advancement of cryptocurrency. In the U.S., players are forbidden by the law to use bank-processed payments for their online bets. Some gambling entrepreneurs, however, have managed to establish cryptocurrency-based gambling sites such as the Seals with Clubs.
“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,” said Bryan Micon, the website’s manager. ”It’s only been a few years for the legal world and there’s nothing at all that says anything about this protocol.”