Crypto casinos: Safe and fun, or a free pass for scammers?
Crypto casinos are exploding in popularity, yet many dodge the regulators. Are punters paying the price?
Contents
- How big is the crypto gambling sector?
- Are crypto casinos regulated?
- Location restrictions: A flimsy barrier
- How fair are crypto casinos?
- The weird world of Twitch.tv
- The final call
- FAQs
Crypto gambling has exploded since the onset of Covid-19 in 2020. But two things become clear when looking into the crypto gambling sector.
Firstly, the choices are seemingly endless. A simple Google search presents pages and pages of crypto gambling sites, all eager to draw users in with bonuses, free spins and fast payouts. Dozens of thinly veiled paid advertisements collate the biggest and best casinos for turning your bitcoins into bags of riches. And secondly, there is a lack of robust data relating to user demographics, let alone average winnings and losses.
Just as the wider cryptocurrency space is often painted as resembling the Wild West, is the crypto gambling sector akin to a poker shark with a loaded gun under the table pointed at oblivious punters? Or does gambling with crypto present a fairer, more transparent platform than traditional gaming?
What is a crypto casino and how safe are crypto casinos? Are they legit or a ruse? Let’s see what the cards can tell us.
How big is the crypto gambling sector?
Unlike traditional gambling, there is no easy way to determine the size and scope of the crypto gambling sector. One reason for this is some confusion about classification.
Casino Guru is an independent database of online casinos that tracks over 4,200 listed gambling sites. Co-founder Jan Kovac told Currency.com that of the 4,200 listed casinos, roughly 1,000 allow users to make deposits with either bitcoin (BTC) or ether (ETH). Crypto is used only for deposits in traditional online casinos, not for making wagers, and often gets converted to fiat, so these casinos operate under traditional guidelines.
On the other hand, there are 250 casinos on Casino Guru’s database where users can wager cryptocurrencies directly. These are deemed the “real” crypto casinos. Among these 250 crypto casinos are the unregulated platforms, or what Kovac calls the “anonymous casinos”. There are currently 30 anonymous casinos on the Casino Guru database.
Using these statistics, we can estimate that crypto casinos make up an ominous 6.66% of the online casino sector, while unregulated casinos comprise approximately 0.7% of the online gambling sector.
Are crypto casinos regulated?
Most crypto casinos hold a gambling licence. However, according to Kovac: “[They are] usually not issued by one of the most reputable authorities of the gambling world, such as the UK Gambling Commission or the Malta Gaming Authority. Most of them are licensed in Curaçao [a former Dutch colony in the Caribbean], which is generally less strict towards casinos and does not have as developed player protection mechanisms as more reputable gambling regulators.’
Anonymous casinos, on the other hand, “take full advantage of the anonymous nature of cryptocurrencies and allow players to gamble fully anonymously, without entering their personal information when creating an account,” Kovac said.
Kovac stressed that anonymous does not necessarily equal bad. “Some of them have a fair approach to gambling despite not being bound by any external rules. That said, there are also some that are unfair or outright scams.”
But this can also be the case for traditional casinos. “With thousands of [traditional casinos] on the market, you can find many reputable websites that treat players well, but you can also find unscrupulous gambling sites that do everything they can to scam people out of their money, including having predatory rules in their terms of use and looking for unfair reasons to void players’ winnings.
“Granted, I would say that the anonymous nature of some crypto casinos creates even more opportunities for rogue practices like this, but the traditional online casino market has these issues as well,” said Kovac.
Some of the worst-ranked crypto casinos in Casino Guru’s guide include Cloudbet Casino, 22bet Casino and Casinobtc.bet, the latter of which Casino Guru states has unfair terms and conditions, unfair maximum wins, fake games and an unverified licence, among other red flags.
At the other end of the table, some of the best-reviewed crypto casinos include King Billy Casino, Bitstarz Casino and RioBet Casino.
Please be aware that Currency.com is in no way affiliated with any organisations mentioned in this article and does not promote gambling in any way, shape or form. UK-based readers can obtain help with gambling addiction through the Gambling Commission, while US-based readers can find help via the National Council on Problem Gambling.
Anonymous casinos have negative implications for age verification and self-exclusion procedures. With no need to supply personal information, age verification checks are simply impossible, and while wallet addresses can be blocked on a platform-to-platform basis, it takes mere minutes to create a new address. The simple fact is: dozens of platforms currently allow children of all ages to access gambling products with no regulatory oversight.
“These are serious issues,” Kovac said,“but I am not aware of any ways of solving them. Anonymous casinos, effective betting limits and age restrictions simply contradict one another.”
Anonymous casinos can be easy to spot. Freebitco.in, powered by the Fun Token, is one crypto casino that is firmly in the unregulated category.
Key indicators include a rudimentary design (though that is not always the case for unregulated casinos), instant platform access and a terms and conditions disclaimer stating: “Your account with FreeBitco.in is not supported by FDIC (Federal Deposit Insurance Corporation) or SIPC (Securities Investor Protection Corporation) protection of any kind.”
Location restrictions: A flimsy barrier
Since gambling legislation varies between jurisdictions, crypto casino websites, even regulated ones, are blocked in certain countries. The US and UK in particular tend to impose tight restrictions on such platforms.
There is, however, one major problem. With VPN protocols typically going for a few dollars per month, a user can easily reroute their web connection through a foreign server, effectively tricking these websites into misreading their computer’s location.
This reporter applied this technique and was allowed into Roobet straight away. No bets were placed and the VPN was immediately disabled.
There is little doubt that the average crypto enthusiast is likely to be well versed in VPN protocols, making geoblocking more of a speedbump than a roadblock.
How fair are crypto casinos?
A genuine cryptocurrency casino operates on the “provably fair” concept, which according to provably.com, “is the process which allows players from all over the world to manually and personally verify the fairness of the games that they’re playing online. In order to achieve this, casinos that work on the blockchain use a special code called the provably fair algorithm.”
The argument goes that “provably fair” algorithms allow for transparency and verifiability over the public blockchain.
But this technology may work better for some games than others. Keegan Francis is the global cryptocurrency editor for the regulated UK credit broker and comparison website Finder. Francis worked for the now-closed crypto casino Peerplays, where he built the sports betting exchange BookiePro, and is well versed in the mechanics of crypto gambling technology.
“Games like rock, paper, scissors, or a simple 50/50 raffle game can easily be implemented in a provably fair way,” Francis said. But as games get more complex, the efficacy of provably fair technology decreases.
“As far as I know, there is no implementation of poker built in a provably fair way: that is, with every card still in the deck hidden, and with the users’ cards hidden from each other, but in a transparent way,” said Francis.
Sports betting presents further challenges to maintaining fairness in the crypto gambling sector.
Francis sais: “If bad or incorrect data is fed into the blockchain, then the application may settle bets and give funds to the wrong user. This problem of verifying data to be used on the blockchain is known as the Oracle Problem. It is a very difficult problem to solve, but is generally done by sourcing data from a wide variety of places, and trusting the consensus among the data providers.”
The weird world of Twitch.tv
The streaming platform Twitch.tv has become a playground for cryptocurrency casino players, with slots players among the most-watched channels on the platform. Popular streamers, including Trainwreckstv and AdinRoss, have millions of subscribers between them. Recommended channels appearing alongside the big names include Xposed, with 449,000 subscribers, and TheSteveStream, with 43,600 subscribers.
Most of these accounts share something in common: they are streaming from Canada. Why? As reported in July 2021 by Wired, major crypto casinos including Stake.com, Roobet and Duelbits are known to strike sponsorship deals with popular Twitch streamers. The problem is that these sites are restricted in the US, making any streaming on their games from a US server illegal. It was also suggested that these casinos let streamers play with house money. But these restrictions do not apply to the rest of North America.
Wired reported that the gaming celebrity Richard ‘FaZe Banks’ Bengston, co-owner of the esports team FaZe Clan, said of his sponsor Roobets: “They treat us so well, fly us out to Mexico for these things. Full compliance, by the ****ing books, baby.”
Does this mean that major crypto gambling sites are helping streamers cross the US border in order to stream for hours or days on end, in a legal jurisdiction, potentially with house money? There is no cement proof of such, but all three crypto casinos named above have been approached for comment.
What is clear is that these casinos continue to sponsor Twitch streamers. Stake.com branding is displayed on all of Xposed’s streams and social media channels, as well as TheSteveStream’s Twitch channel.
It also appears that Roobet is a major donor to Xposed, according to Xposed’s “gifting subscriptions” extension, which shows a total of almost 3,000 donations given to Xposed by Roobet. The value of these gifts cannot be determined. Xposed (real name Cody) has been approached for comment.
Peter Jesko, data analyst lead at Casino Guru and a professional poker player himself, told Currency.com: “I am sure there is some business relationship between most big casino streamers and the casinos they play at. This can range from a regular affiliate relationship to something more interconnected.”
Although the intricacies of these relationships remain unclear, Jesko said: “Something just doesn’t feel right. Playing $1,000 spins on slot machines with your own real money doesn’t seem realistic, nor does it feel right to be advertising this kind of behaviour to the world.
“Many people claim that these streamers play with fake money or that the money to play is provided to them by casinos. I am quite convinced that most streamers placing these huge bets do not play with their own real money, but it is very difficult to find direct evidence,” said Jesko.
There is little doubt that Twitch streamers continue to generate healthy sums in sponsorship deals. But one major streamer, Trainwreckstv (real name Tyler), has recently spoken out in a series of YouTube videos about the heavy losses he has sustained in the past year. While he still amasses thousands of viewers on Twitch, he regularly warns his viewers that losses are almost guaranteed.
The final call
In general, what advice does Francis have for punters? “Many crypto casinos online are scams. If the user cannot verify that the house doesn’t have an edge, or if they cannot see how random numbers are being generated by the casino games, then I would refrain from using this type of casino,” he said.
Kovac advised: “Players need to be careful and carefully pick a reputable casino website to play at, whether it is a crypto casino or not.”
Crypto gambling platforms range from well-run, regulated entities to completely unregulated offerings with zero age checks or user protection. You can save yourself from being burned by performing the appropriate due diligence checks. Always read the terms and conditions, always research the parent company and always check for (genuine as opposed to paid-for) reviews.
FAQs
Are crypto casinos legal?
That varies on a case-by-case and jurisdiction-by-jurisdiction basis. In general, gambling with crypto is not illegal, although many crypto casinos dodge regulations by operating in offshore jurisdictions, including Curaçao and the Isle of Man.
Should I use crypto to gamble?
Currency.com does not promote gambling in any way, shape or form. However, if you decide to join a crypto casino, we would suggest that you perform an in-depth check of the platform’s credentials.
Does it offer self-exclusion options and betting limits? Can you prove its fairness? Does it adhere to any relevant regulations? What are the reviews like? Comprehensive due diligence can save you from falling victim to a scam.
UK-based readers can obtain help with gambling addiction through the Gambling Commission, while US-based readers can find help via the National Council on Problem Gambling.
Is buying crypto a gamble?
Buying cryptocurrencies like bitcoin and ether is as much of a gamble as buying traditional stocks. The markets can go up, down or sideways, depending on many external factors.
As ever, Currency.com recommends seeking independent, third-party advice and never investing or gambling with any money that you can afford to lose.
