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5 ways that crypto is changing the face of online casinos

Companies / Gambling Jun 16, 2021 - 08:03 AM GMT

By: Boris_Dzhingarov


Online casinos have been around for almost the entire life of the internet but the advent of cryptocurrencies has radically changed the face of the sector.

The use of crypto has changed the public face of casinos, giving people more ways to pay and opening up the sector to people who wish to use crypto for their gaming.

It has also changed the backend of the casino business and whilst many of the new aspects of crypto may be in their infancy, the functionality of blockchain suggests that we are only at the start of what looks like an exciting and sector-changing time.

Indeed current estimates are that around 10,000 different cryptocurrencies exist and while some, like Bitcoin and Ethereum are exhibiting more stability and acceptance, others are not so well defined.

Only time will tell whether the increasing acceptance and use of cryptocurrency will prove to be a long-lasting transformation or merely a secondary payment method that supplements rather than supplants traditional currencies.

So how has crypto changed both the front and back end of the online casino business? Read on to find out more.

A different (and larger) user base

Accepting crypto has without a doubt opened up the world of online casinos like Ethereum casino to a new user base of early adopters. Until recently, the world of the online casino was confined to users of traditional physical currencies and whilst this has worked well, there is a whole subset of society that wasn’t well served.

Whilst still a relatively small number of individuals, Crypto users have increased rapidly over the last few years and the sector has shown exponential growth.This has opened up a much wider market for online casinos and introduced online gaming to a different set of users.

The option to use crypto instead of traditional currency means that casinos are at the forefront of the companies that will accept newer blockchain-based payment methods.

Increasing anonymity

The use of traditional currency comes with the need to prove the users’ identity and alongside this the storing of personal information on the casino database.

For many users this is fine, but for others, it is a step too far. Using crypto allows casinos to offer anonymous payment and withdrawal methods, meaning that users don’t need to worry about their personal data being compromised.

Changing risk profile

For the owners of online gaming firms, cryptocurrency offers many more opportunities to increase business.

However, accepting and holding crypto changes the risk profile of the business significantly and it is something that has to be understood and managed behind the scenes.

It’s true to say that in the past there have been security concerns over the use of cryptocurrencies and this increases the risk for gaming companies.

The risk for the company will increase due to;

  1. Risk of fraudulent transactions
  2. The loss of crypto keys
  3. The compromising of the private key
  4. Volatility in the underlying value of the currency

This means that it is important that companies looking to accept crypto look at more established types and implement all of the same security and controls as they would with any other currency.It’s also important that a business isn’t exposed to too much crypto and that the holding is suitably diversified.

Additional regulatory requirements

The regulatory landscape has always been a diverse one for online casinos. Many are situated in low tax jurisdictions and many choose to be in places where regulation is, to say the least, ‘light-touch’.But for others, it is becoming clear that regulators are now taking a keener interest in the twin issues of crypto and gambling.

The UK Gambling Commission recently put out a position paper on the subject and it is expected that the dim view that authorities take of the whole issue is likely to result in an extra regulatory burden being placed on online casinos.

Additional reporting requirements

There can’t be too many people that would equate the exciting world of an online casino with the somewhat dry topic of international accounting standards but for the CFOs of online casinos, this is a very real issue.

Although it performs all of the functions of a traditional currency, in financial reporting terms cryptocurrencies are dealt with in the same way as an intangible asset, meaning that the accountancy profession has an additional reporting burden.

In summary: Online casinos face a time of risk and opportunity

Risk is the name of the game for online casinos, but for the operating businesses, the landscape has rarely looked as full of opportunity and risk.The acceptance of crypto has been a superb way to introduce games to different users and to deliver more functionality such as anonymity for gamblers.But at the same time, it introduces more requirements on the operator in terms of financial reporting, risk management and possible regulatory changes.

For well-constituted operators, the addition of a crypto acceptance model means that they can offer their services to a wider clientele and make sure of potentially lucrative newer markets whilst managing their risk through a diversified portfolio.

It will be interesting to see how the rapid increase in the use of cryptocurrency changes the sector and opens up new opportunities for forward-thinking online gaming operators.

By Boris Dzhingarov

© 2021 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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