Online gambling has been around for decades now. In 1994, Antigua and Barbuda become the first nation to provide licenses to companies who wanted to run online gambling operations. A short while later, there were over 200 online casinos in 1997 and over $1 billion in revenue generated from online casinos. Today there are thousands of online casinos in an online gambling industry is worth more than $100 billion. The industry has come a long way since a small Caribbean nation laid the foundation for the online gambling industry. Of course, there are still some online casinos who operate on legacy technology and haven’t adopted emerging trends such as the ability to accept wagers in cryptocurrency from their players. In this article we make the case for some of the reasons why online casinos should accept cryptocurrency.
Cryptocurrency as a payment rail for iGaming
The ability to facilitate quick deposits and withdrawals is an important feature for online casinos to offer their players. This feature is one of the reasons that makes cryptocurrency an excellent payment rail for the iGaming industry.
Despite the recent market sell off, cryptocurrencies still have a cumulative market cap of around $1.5 trillion USD. Cryptocurrency users have also long had a tendency to gamble, with some of the earlier years of crypto adoption featuring a majority of blockchain transactions being gambling related.
Many white label or turnkey casino software providers now offer support for cryptocurrency transactions these days. Unfortunately the vast majority of B2B casino software providers offer crypto support in a limited capacity. Usually they only support one or a handful cryptocurrencies – typically Bitcoin, Bitcoin Cash, or Tether – and in many cases only support it as a means for deposit. That means bettors are not able to retain or withdraw their balance in cryptocurrency. For operators who have dealt with cryptocurrency bettors before, they know it is crucial that customers are able to deposit, play, and withdraw in the same cryptocurrency they originally deposited with.
At Lion Gaming Group, our partners are able to accept over 1,000 different cryptocurrencies and tokens of their choosing. Our operator’s customers are able to play in the currency they deposited, and are not forced into converting their cryptocurrency into fiat. Additionally, there is no need to choose between fiat or cryptocurrency as a payment rail since our turnkey online casino solutions are built to accept both fiat & cryptocurrency. If you wish to accept only fiat, or only cryptocurrency, we are able to provide that as well.
On-chain wagering for online casinos
We’ve previously written about on-chain wagering, and have gone into some of the differences between blockchain technology and cryptocurrency as a payment rail. We’ll briefly summarize the advantages of not only accepting cryptocurrency for your online casino operation, but why operators who are building for the future should incorporate on-chain wagering to their product offering as well.
When a bettor places a wager on an on-chain, the bet is recorded on the blockchain and represents a public receipt of their wager. Then, depending on the outcome of the bet, a smart contract pays out any winnings directly to the bettor or any losses directly to the operator.
For operators, there are several benefits to offering on-chain wagering. For one, they no longer need to be concerned about malfunctioning games that improperly pay out. They also do not run the risk of chargebacks or fraudulent transactions via the use of cryptocurrency since outcomes of bets are automatically executed. Plus, they can present independently verifiable results to the public and to their players around parameters of games to prove to the players that the games are not unfairly rigged against them.
What unique value proposition does cryptocurrency offer?
Cryptocurrency has several features unique to it as a payment rail that are particularly valuable to the iGaming industry.
- Privacy is hard to come by with traditional payment rails. With cryptocurrency, customers no longer need to worry about whether their bank or credit card company is going to judge them for gambling, sell their data to advertisers, or send them statements that might get them grief from their spouse/companion.
- Cryptocurrency users tend to be younger: in the US, 43% of all males age 18-29 own cryptocurrency compared to 16% of the general population. Operators have long struggled with attracting Millennial and Gen Z customers, and cryptocurrency adoption is a tool operators can use to attract this demographic in addition to improving their Esports offerings.
- The Web 3 era is just starting, and Web 3 is built on blockchain technology. In order to utilize smart contracts and offer products such as on-chain wagering, operators must use a native cryptocurrency solution. An additional benefit of having a native solution as opposed to using a 3rd party payment processor, is that it also eliminates 3rd party transaction costs. Lion Gaming has developed on-chain wagering solutions for all of our white label casino and sportsbook solutions.
- 3rd Party payment processors for cryptocurrency typically charge much lower fees than traditional payment rails, with typical costs per transaction being under 1%.
We hope this helps answer why online casinos should accept cryptocurrency. If you are a iGaming operator, or are considering launching an online casino or sportsbook, contact [email protected] today for a free consultation.