Cryptocurrency gambling establishments are surging globally, buoyed by relaxed regulations despite ongoing prohibitions
In the dynamic world of online gambling, a new player has emerged – crypto-casinos. These digital platforms, such as Stake, Rollbit, and Roobet, are revolutionising the industry, but they also pose a significant challenge for regulatory authorities.
Recent revelations by the Financial Times have shed light on the ease with which one can open a player account on Stake without any prior address or income verification, using a VPN. This raises concerns about the security and legitimacy of these platforms.
Despite these issues, Stake insists that it complies with applicable laws and implements player protection and anti-money laundering regulations. However, the company lost its white-label license and withdrew from the UK market due to investigations by the UK Gambling Commission (UKGC).
The crypto-casino market is not a marginal phenomenon. According to the Financial Times, over 25 million users have placed bets or made wagers more than 300 billion times on Stake alone. The company handles approximately 4% of all global Bitcoin transactions, underscoring its significant influence in the crypto sphere.
The gross gaming revenue from crypto gambling increased to over 81 billion USD (around 72.3 billion EUR) in 2023, a fivefold increase from 2022. This growth is attributed to the allure of anonymity and the perception of better winning chances that crypto platforms offer, as promoted by influencers who distribute vouchers to incentivise new users to sign up.
However, the legal situation regarding crypto-casinos is complex. Matthew Litt, an American lawyer, stated that while the theory is clear, enforcing it in practice is difficult. Many gambling companies are shell companies whose owners are difficult to trace, making regulation and enforcement a challenge.
Despite bans in countries like the USA, China, the UK, and most EU states, access to these platforms can be easily established using VPNs, mirror websites, or redirects. In practice, enforcement against crypto-casinos often fails due to their international structure.
International organizations and governments, such as Swiss authorities, are working closely with international bodies to block illegal platforms. Regulatory authorities like the UK Gambling Commission are also aiming to license and regulate gambling providers to curb illegal crypto-casinos. Additionally, the Bank for International Settlements (BIS) has proposed enhanced anti-money laundering measures using blockchain transaction histories to better control cryptocurrency-linked activities.
Despite these countermeasures, the crypto-casino market continues to aggressively advertise on social media to attract customers. Prominent streamer xQc publicly admitted to having lost around 100 million dollars in gambling over the years. Participation in illegal gambling is prohibited by law in Germany, but such offenses are rarely prosecuted.
As the crypto-casino market continues to grow, it is clear that regulatory authorities face a significant challenge in ensuring the safety and legitimacy of these platforms. International cooperation may be the key to curbing the growth of illegal crypto-casinos in the coming years.
