Cryptocurrency as a Casino Chip
The debate over whether cryptocurrency is a commodity or currency is ongoing, and will likely never be truly settled. However one thing for certain is that cryptocurrency as a casino chip is an excellent use case for cryptos. Continue reading this article to learn more about the attributes of cryptocurrency that make it the preferred payment method for online gaming.
From an operator’s perspective, cryptocurrency makes a great casino chip because it reduces their transaction costs. Instead of paying a few percentage points to a credit card service, Skrill or other fiat payment gateway, operators are able to pay below 1% when utilizing a 3rd party crypto payment processor, and as low as zero fees at all should they utilize a native wallet solution. The iGaming industry has relatively tight margins and is a volume dependent industry. To give some background, most operators try to have a hold of roughly 5% in the sportsbook, with even lower numbers in the casino (varies per game, depending on the house edge of each game). Hold is how much money the casino retains after paying out winning wagers. Thus reducing the transaction costs of deposits and withdrawals by even a single percentage point can have an outsized impact on the bottom line for an operator.
An additional benefit for operators is that the use of cryptocurrency eliminates the possibility of a customer trying to file a chargeback, this is because cryptocurrency transactions are irreversible.
Pseudo-anonymous and private
Traditional payment methods lack any resemblance of privacy. When a transaction occurs using a fiat payment rail, such as a credit card, bank payment, or a payment processor like Skrill, the consumer’s transaction data is being logged with multiple different 3rd parties. While the image society has of the gaming industry continues to improve, evident in how many jurisdictions are beginning to provide legal frameworks for the industry to work within, gambling is still seen by parts of society as a taboo form of entertainment. As such, it is important to ensure that your players feel comfortable playing on your iGaming platform without having to worry about where their transaction data is being logged, and not wondering if at some point down the road that it may be used against them in a negative manner (i.e. credit card company using it as a factor to deny a credit limit increase.)
Despite cryptocurrency commonly being portrayed as being anonymous and untraceable, this portrayal could not be further from the truth. Transactions that occur over the blockchain are publicly available, and those with relevant resources at their disposal, such as a government, are able to trace the transactional record and identify who sent what payments. Yet using cryptocurrency as a gaming chip ensures that your players information stays private. This is because cryptocurrency is pseudo-anonymous — even though it is possible to trace the transaction record, it is not possible for a 3rd party payment processor to identify the name of the depositor since they do not have access to the KYC documents the casino provider has, or the KYC documents a cryptocurrency exchange has. Thanks to the pseudo-anonymous nature of cryptocurrency, operators are able to stay compliant with KYC & AML guidelines while shielding their players from unnecessarily sharing their transaction data with 3rd parties.
Smart contract compatability
As blockchain technology and the benefits that come with harnessing it becomes more widely known, there is an emerging generation of players who prefer to wager on-chain instead of in the traditional off-chain format. On-chain wagering utilizes smart contracts for wagers, meaning that the wagers are automatically settled, and that a publicly available receipt is issued since the transaction is occurring over its applicable blockchain (i.e. Ethereum). In order to wager on-chain the bettor needs to be placing their wager with cryptocurrency, thus operators who transition from legacy betting software to next-gen software that is compatible with on-chain wagering will need to use cryptocurrency as a casino chip. It is important to note that even though many casino and sportsbook operators accept cryptocurrency as a casino chip today, few currently offer on-chain wagering.
In addition to the reasons above, there are other benefits to utilizing cryptocurrency as a casino chip. Many cryptocurrencies, there are over 23,000 of them, have loyal communities of token holders. Most of those cryptocurrency communities do not have the ability to wager with their respective cryptocurrency or token since no casino currently accepts their token. Lion Gaming enables our partners to accept over 1,000 different cryptocurrencies. An easy way for an operator to ingratiate themselves with a pool of potential customers is to accept a cryptocurrency and provide a use case for it that no one else is offering.
Can cryptocurrency as a casino chip help your iGaming business?
For a free consultation on how using cryptocurrency as a casino chip can help improve your iGaming business, contact us today for a free consultation. In addition to a white label casino solution, Lion Gaming offers a comprehensive white label crypto casino that will meet and surpass any crypto-related demand your platform has. Let’s get started!