Bitcoin unregulated gaming sites are attracting more and more players, who bet billions and enjoy the non-regulated environment.
Bitcoin is a payment system, the so called “digital currency”, which uses cryptography to control the creation and transfer of money.
It was introduced in 2009 by a developer with the pseudo name Satoshi Nakamoto and customers started using it by verifying and recording various payments in a public ledger. Users exchange bitcoins using wallet software and receive different products, services or currencies.
As the Bitcoin currency gained significant popularity, Bitcoin gambling became a market niche relatively soon after, and it is completely thriving at the moment. The most popular bitcoin gambling site SatoshiDICE was founded in 2012 and just a little over a year later, the owner Erik Voorhees, sold it for 126,315 bitcoins (equal to $12.4 million).
It is not surprising that specialists have calculated that more than half of the international Bitcoin transactions are bets on gambling sites. For example, Just-Dice website reported deals for more than $2 billion in bets, since its start in June 2013.
Bitcoin gaming sites are enjoying players, who bet billions in the non-regulated environment
• Bitcoin was introduced in 2009
• The virtual currency gained immediate success
• Just-Dice website declared deals for more than $2 billion in bets, since its start in June 2013
Currently, regulators are experiencing hard time with this form of gambling, as the Bitcoin currency is not regulated and it is changing fast. There are additional complications coming from the fact that Bitcoin gambling sites are usually on offshore servers. Therefore, any sort of regulation is hardly possible, making the virtual currency even more appealing.
Tom Carper, chairman of the Homeland Security Committee, which had a hearing on virtual currencies in November 2013, confessed that he heard about Bitcoin for the first time, only six months before the hearing. He said: “We talked about a lot of uses of virtual currency yesterday, and I don’t recall gambling ever coming up in a two-and-a-half hour hearing.”
The advantages of Bitcoin gambling
Players enjoy using Bitcoin because they receive their winnings immediately and the role of the bank is excluded, because Bitcoin is also a payment processor. Additionally, Bitcoin makes international gambling extra easy, as the currency exchange issues are completely avoided.
Moreover, according to Erik Voorhees, Bitcoin gambling sites keep smaller percentage of the winnings, compared to land-based and mobile casinos, for example. “A Vegas casino game might have a house edge of 10%. This means that if you’re going to gamble, it’s far smarter to play SatoshiDICE than a Vegas casino.”
Another reason for the success of Bitcoin is the fact that all transactions are anonymous and transparent, which is one of most important variables when it comes to gambling. Voorhees explained that Bitcoin allows for all bets to be fair and what is more, gamblers can make sure this everything is transparent at anytime.
He added that Bitcoin’s mathematical algorithm, doesn’t allow for any cheats by the house: “This is absolutely revolutionary, and isn’t being done by any billion dollar casino in Vegas.”
Legal issue in the US
It seems that USA is the country where Bitcoin sites have rather unclear fate. As online gambling sites in the US are currently allowed only in three states – New Jersey, Delaware and Nevada – some bitcoin sites prefer to stay away from American gamblers.
One example is the SatoshiDICE site, which stopped accepting bets from players with US IP addresses in the middle of 2013. Voorhees commented that the company is trying to just take a “proactive measure” and avoid any potential risk.
Bitcoin players and providers usually just try to stay away from any unclear legal area, according to Nelson Rose, a Whittier Law School professor, who was a gaming consultant, and also provided classes about gaming for FBI agents.
It seems that even the three states where online gambling is allowed still haven’t incorporated digital currency betting into their US gambling laws.
A.G. Burnett, the chairman of the Nevada State Gaming Control Board, commented that the state doesn’t allow gambling with Bitcoins. He said: “Unless it’s expressly allowed, it simply can’t happen.”
However, the law doesn’t explicitly say that a player can’t bet using Bitcoin. Burnett added: “The laws don’t contemplate it, and we’re not interested in changing that.”
Still, for the time being, despite some vagueness, Bitcoin players are enjoying the friendly betting environment and this type of gambling will definitely continue to exist, at least until more regulations take place in different gambling friendly countries.