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The international online gambling industry is an estimated $30bn market, and growing. More importantly for Bitcoin, it’s a global market that depends on fast, irreversible payments.
Just
like a ordinary casino chip in any land-based casino, digital bitcoin
provides privacy, immediacy, and payment finality. Unlike most typical
consumer purchases (where returns and chargebacks are usually
legitimate), a wager is a one-way transaction. Of course, you may be
dissatisfied with the outcome, but that does not justify a
reimbursement. The online gambling industry has struggled with this fact
for years.
Plagued by chargebacks and fraudulent transactions,
specialized payment methods and payment companies have sprouted up
around the online casino world to address the problem of payment finality.
iGaming and bitcoin
For
the first time ever, the world’s largest and most comprehensive trade
event in gaming, ICE Totally Gaming 2014, will feature a half-day seminar on bitcoin in the iGaming environment on 4h February. The London-based conference represents every gambling sector: betting, bingo, casino, lottery, mobile, online, and social gaming.
Organized by Gran Via’s Willem van Oort,
the seminar features two extraordinary panels: ‘Regulatory Aspects’ and
‘Bitcoin’s Competitive Edge’. I will also be speaking on the evolution
and future of bitcoin as a new monetary unit.
Moderated by iGaming attorney David Gzesh,
the regulatory panel will assess the compliance challenges in dealing
with bitcoin payment processing applications, including currency
conversion, reduced transaction costs, payment finality, Know Your
Customer rules, and coin management techniques.
Panelists include; Stuart Hoegner, managing director at Gaming Counsel PC; Steve Beauregard, CEO and founder of GoCoin; and Michael Ellen, director of licensing and strategy at Alderney Gambling Control Commission.
The
second panel of the day focuses on the competitive advantages offered
by bitcoin in the iGaming industry and will explore potential for new
games, new jurisdictional regions, and unique investment opportunities
on the horizon.
Stellar panelists include; Esteban van Goor, indirect tax lawyer at PwC; Ivan Montik, CEO and founder of Softswiss; Erik Voorhees, founder of SatoshiDice; Brock Pierce, managing director at Clearstone Global Gaming Fund; Jiten Melwani, founder of Bitgame Labs; and Gabriel Sukenik, director at Coinapult.
Into the mainstream
We are now witnessing the long-awaited arrival
of mainstream online casinos and betting establishments into the
bitcoin universe. This is the beginning of the second-generation bitcoin
gambling sites – the first generation exemplified by sites like SatoshiDice, BitZino, and Seals With Clubs.
CoinDesk reported on Wednesday
that Malta-registered casino Vera&John has become the first of the
major licensed and regulated online casinos to accept bitcoin deposits.
The gaming operator accepts inbound customer payments which are then
processed and converted into euros via Panama-based Coinapult service.
Following a trend common among existing online poker sites like WinPoker,
Vera&John will only permit wagering in national currency units. The
strategy of utilizing bitcoin only as a customer payment transfer
mechanism eliminates the exchange rate risk for the operator and the
player.
Alternatively, if the player uses bitcoin for deposit,
betting, and withdrawal, then the exchange rate risk stays with the
player. Examples of that approach include CloudBet and CoinBet.
Sports betting site Cloudbet
claims to have revolutionized the online betting experience by
introducing the world’s most advanced bitcoin betting platform
accessible from desktop and mobile devices. Users can browse an
intuitive, elegant site to place immediate and discreet bets on any
world event – at zero fees.
CloudBet currently deploys 100% offline cold storage for all bitcoin assets and the site has received excellent reviews.
In addition, Costa Rica-registered CoinBet offers casino gaming, poker, and sports betting all under a simple email registration with password. CoinBet claims
to be the first legitimate, licensed entity to re-enter the real money
online gambling space since Full Tilt Poker, PokerStars, and Absolute
Poker all had their sites shut down by the US Department of Justice in
April 2011. However, that particular claim may actually go to Costa
Rica-registered Infiniti Poker.
Unlike
other regulated gambling jurisdictions issuing licenses, Costa Rica
does not require operators to obtain and verify the identity of its
players. On the policy of accepting US players, John Bauer, senior vice
president of gaming at CoinBet, proudly emphasized:
“Look,
to take away a person’s fundamental right to spend their money on
whatever they choose is wrong, unconstitutional, and without question,
an un-American thing to do.”
He continued: “We are
not here to engage in a legal debate, we are here to serve up the very
first legitimate workaround to the complex online gambling laws in this
US market. We are returning to Americans their freedom to choose and
giving them their power back!”
Internet gambling in the US operates in a legal grey area.
Other gaming operators in the near future may come to appreciate
Bauer’s statement because the US jurisdiction has yet to see a
clarifying test case in the matter of bitcoin-only wagering without conversion.
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