THE CRYPTO GAMBLING REVOLUTION • Some versions of the game also let players cash out before their chosen multiplier is reached. • But if the multiplier level “crashes” before the player’s level is reached (or before they cash out), the player loses their stake for that round. A round can last only a matter of seconds, depending on how high the multiplier reaches before crashing. Several elements of crash games would seem to make it an ideal category for affiliates. The game is fast-paced and GBGC observes that players seem to have long playing sessions. But the return to player (RTP) for some crash games is as high as 99%, which leaves little margin to be shared between operator and affiliate. Some operators also let users invest in the game’s bankroll, adding their own cryptocurrency to the ‘house’ bank. In this way, the investors can earn a share in the game’s profits (and losses). It does mean that these investors also take their share of the slim 1% - 1.5%margin. THREATS AND RISKS Government attitude toward cryptocurrencies and crypto-gambling will be central to how the sector develops. The features which make blockchain-based cryptocurrencies attractive to users – decentralized, private and relatively anonymous – are exactly those features which cause governments and regulators concern. Gambling regulators’ concerns focus on cryptocurrencies’ ability to allow the circumvention of AML and KYC requirements, as well as instant and anonymous cross-border payments. Player protection could also be at risk from unscrupulous crypto-gambling operators. As with the regulation of internet gambling, the governments of major economies might appear slow and cautious in their approach to cryptocurrencies. But governments always have the advantage of time. One trend that could develop is the launch of central bankbacked digital currencies as a means of replacing the more volatile decentralised cryptocurrencies. Government could also seek to control the cryptocurrency mining or creation process, through attempts to licence or tax the activity. The U.S. Internal Revenue Service (IRS) treats cryptocurrency as “property” and it is taxed accordingly. Transactions worth $10,000 or more will also have to be reported to the IRS. As more government implement similar requirements, it could curtail the appeal of crypto-gambling to customers, affiliates and operators. Cryptocurrency payments do have benefits for crypto-gambling operators: no fraud, no chargebacks, and low payment processing costs. But banking continues to exert a strong influence on internet gambling, and this is true of crypto-gambling too. Banks have the same concerns as governments and regulators about cryptocurrency – complying with their AML, KYC and Source of Funds requirements. GBGC attended the Betting on Football conference in 2019. At that time, gambling operators on the payments panel believed that the use of cryptocurrencies for the regulated gambling operators was being held back by the fear of losing their conventional banking arrangements. Affiliates, too, must assess the risk of getting involved in receiving cryptocurrency revenue shares or payments, if it could put their other banking arrangements in jeopardy. The FBI’s ability to recover Bitcoins paid as part of the Colonial Pipeline ransom in June 2021 showed that it is possible to track Bitcoin and its transactions through different wallets. The equivalent of $2.3 million was seized from a currency wallet using a court order. The FBI did not reveal exactly how it was able to trace the Cryptocurrencypayments do have benefits for cryptogambling operators: no fraud, no chargebacks, and low payment processing costs. But banking continues to exert a strong influence on internet gambling, and this is trueof crypto-gambling too. G P W A t i m e s . o r g 34
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