.svg)
Gambling regulators and financial services are leaving a path open to the black market by preventing licensed operators from offering cryptocurrency gambling, executives have warned.
By refusing to regulate and process crypto gambling transactions, regulators and lawmakers are not properly protecting their markets, according to a senior executive from international online gambling company evoke.
Jeffrey Haas, evoke’s chief growth officer, said: “I think regulators should look into it now, because players want it.”
Bo Flindt Jørgensen, CEO at Danish lottery Landbrugslotteriet, agreed. “Regulation needs to look into this at some point in time,” he said.
Haas, speaking at the Scandinavian and Nordic Gaming show in Copenhagen earlier this month, admitted he was a proponent of the virtues of cryptocurrency in general, but argued that whatever your position on crypto there were customers seeking to gamble with it.
“The UK Gambling Commission won’t allow us to touch it. Our banks won’t allow us to touch it,” he claimed.
The commission’s official position is that it will allow its licensees to use what it refers to as “digital currencies”; however, the anonymous nature of crypto and its well publicised links to crime make it harder to reach the anti-money laundering threshold required to be compliant.
“If you want to accept digital currency as a means of payment (either directly or through a payment processor which accepts digital currencies) you must satisfy yourself and us that you can meet your obligations in relation to anti-money laundering and that you are acting in a socially responsible way.”
To date, no licensees in the UK are accepting cryptocurrencies for gambling purposes, the commission told Vixio.
“In the US, the regulators’ view is that once it’s a nationally recognised form of currency you’re allowed to bet with it. That is an impossible bar,” said Haas.
Laws in the US states of Wyoming and North Carolina both allow gambling operators to accept crypto payments, but neither currently has any licensees that have taken up the opportunity. However, most states have been resistant to calls to open up to crypto.
Failing widespread acceptance, Haas wants enforcement.
“Unless we’re meeting consumer demands they’re going to find it elsewhere, so I'd like to see regulators take a pragmatic approach,” he said. “Or take action against those that are meeting that consumer demand.”
The size of the crypto gambling market is hard to measure, particularly because the vast majority of it takes place outside the regulated market.
The claim that 60 percent of all Bitcoin transactions used are for gambling can be found across the internet, but the claim is overwhelmingly presented without evidence.
By contrast, a 2022 academic paper by researchers from MIT and the London School of Economics calculated a vastly different statistic.
“Illegal transactions, scams and gambling together make up less than 3 percent of volume,” said the researchers.
However, the presence of crypto gambling operators in the market is undeniable.
Perhaps the most prominent is Stake, which has grown from its base in Australia to become a major market force.
Although it accepts fiat currency and holds licences in several jurisdictions, Stake still predominantly advertises itself as a crypto-driven gambling operator.
The firm generated $2.6bn in gross gambling revenue in 2022, according to reports in the Financial Times.
