(Image credit: BTC Keychain)
Not all that long ago, bitcoin had a reputation as something of interest for the tech geeks and criminals of the online world. It was an interesting side-note in a world of ever-expanding tech ideas, but little did most foresee just how quickly bitcoin was about to take off.
Bitcoin went through more than a few extreme fluctuations in value relative to “real” currencies, but it never quite managed to fold outright. Bitcoin just continued humming along and picking up users along the way. Eventually, someone decided to start a bitcoin gambling site. It’s difficult to determine which was the first, but the first one I and many others ever stumbled across was SatoshiDice.
SatoshiDice went live in 2012 and is still in operation today. According to the SatoshiDice website, over 4 million bitcoins have been won and more than 6,000,000 individual bets have been placed. The founder of SatoshiDice sold the website to an anonymous buyer in 2013 for 126,315 BTC, which was equivalent to $11.5 million at the time. Nowadays, that many bitcoins is equivalent to nearly $90 million.
Seeing the success of SatoshiDice and general uptake of bitcoin, a few US-facing gambling websites opted to begin accepting deposits and paying withdrawals via bitcoin transactions. Unfriendly gambling laws had been causing all kinds of payment processing headaches, but bitcoin operates outside any government’s banking system. Thus, we got the first full-fledged bitcoin casino sites.
Bitcoin Expands Beyond the US
The United States may have been the most obvious market for bitcoin casinos, but it was hardly the only market dealing with unfavourable gambling laws or complicated banking situations. Declined credit card deposits have been the bane of online casinos around the world for years.
It didn’t take long before online casinos around the world were jumping on the bitcoin train. By 2013, some were estimating that nearly half of all bitcoin transactions were related to online gambling.
Online gambling just might have have played an instrumental role in getting bitcoin over the initial hump that separated it from a curiosity for technophiles into something that everyday people could actually put to use. In any case, bitcoin has expanded its reach beyond online casinos and into more mainstream industries.
An increasing number of e-Commerce businesses are now accepting bitcoin payments. Microsoft, Reddit, Dell and Expedia are just a few examples of well-known companies that will let customers pay for goods and services with bitcoins. The increased adoption among big-name companies has likewise increased the visibility of bitcoin, which in turn is spurring even more adoption.
Now, even online casinos that don’t even really need to accept bitcoin are choosing to do so simply to meet the demands of their customers. This is happening even in countries where credit cards and bank transfers still work just fine for online gambling. Customers and operators are both seeing the advantages.
Bitcoins provide gambling operators with two other major advantages that most traditional payment methods lack: bitcoin transactions cannot be reversed (credit card transactions are notoriously high risk for online casinos) and processing fees are nearly zero.
For example, PBS talked to Bryan Micon about his bitcoin poker site Seals with Clubs back in 2014. He informed that over the last 2.5 years, he estimated that his poker site had completed roughly 20,000 lifetime transactions and paid about $20 in transaction fees – total.
One of the primary concerns plaguing operators and players alike relates to the volatility of bitcoin values compared to traditional currencies. Bitcoin has settled down somewhat in recent times, but its value was all over the place in early years. As a completely decentralized, unregulated and low-volume currency, bitcoin can be a little intimidating.
However, even that may be changing. A recent Off Shore Gaming Association article quoted an overseas gambling website operator who had this to say regarding volatility:
“We’ve seen far less fluctuation in bitcoin since we’ve been offering it than we have with the Canadian dollar, the Euro or even the British Pound and we accept all of those as payments. And because we don’t have to deal with the usual fees associated with other currencies in the end we’ll end up ahead even if does fluctuate by a few hundred dollars here and there.”
Slowly but surely, bitcoin’s kinks are being ironed out while its advantages become more and more apparent. Bitcoin is also shedding its reputation as a somewhat sketchy, back-alley currency.
Licensed Online Casinos Adopting Bitcoin
This past July, the UK Gambling Commission updated its Licensing Conditions and Codes of Practice to include bitcoin as a “cash equivalent” that may be accepted by licensed operators. Soon after, NetBet became the first UK-licensed operator to begin accepting bitcoin payments. It is probably only a matter of time before other online casinos follow suit.
The thing to remember is that UK operators serve a wide range of countries. While a gambler from the UK might see bitcoin listed as a deposit option and think “that’s neat,” a Russian gambler might actually rely on bitcoin due to the government imposing restrictions on all other payment methods.
Now there is word that the Malta Gaming Authority may be the next regulator to take up the bitcoin issue. As more regulators get on board, it will only speed up the adoption of bitcoin for gambling.
Of course, challenges remain. Some nations have reacted to bitcoin with hostility and suspicion to the idea of a decentralized currency free from the manipulation of government bureaucrats. China, Italy, Iceland, Russia and a handful of other countries have either banned bitcoin outright or seem to be strongly considering doing so.
The thing is, bitcoin casinos are going to be very difficult to regulate. The currency itself is beholden to no government, and its staunchest supporters tend to be very privacy-oriented. If a gambling website in one country is happy to accept bitcoins from, say, a Russian gambler, the Russian government is going to have a hard time stopping that from happening. There will be setbacks but over the long run, I believe bitcoin gambling is just getting started.
Wes Burns co-founded OnlineCasinoSites.com with a mission to help gamblers understand and navigate the regulated online casino market in all countries around the world. Wes is a respected gambling journalist, working in the industry since 2008.