Internet gambling could open the doors to crypto
OWith bitcoin prices falling this year, it’s hard for less experienced investors to think about issues like crypto use cases.
Still, expanding the use case, including adding more industries and locations that will accept crypto as a form of payment, is integral to the thesis of long-term crypto investing. Additionally, the extended use case can support crypto-correlated stocks and exchange-traded funds, such as the VanEck Digital Transformation ETF (DAPP).
Internet gaming, also known as iGaming or online casinos, is a ripe frontier with potential for several DAPP components. While iGaming is a new concept in the United States and is currently only allowed in a handful of states, it is very popular in a range of markets outside of the United States, including many markets where i Adoption of cryptography is high.
“The application of blockchain transactions in iGaming significantly reduces payment processing costs and could potentially improve operators’ earnings before interest, taxes, depreciation and amortization (EBITDA) by up to 8 ppts,” wrote Edward Engel, analyst at RothCapital. “Over $3 billion in gross gaming revenue (~5% of iGaming’s global GGR) is already wagered using crypto, and the regulatory landscape is improving both globally and in the U.S. Meanwhile, the rapid growth of gray markets is driving innovative solutions from leading B2B vendors, and we’re seeing this accelerating adoption in white markets.”
In the United States, states that allow iGaming and online sports betting currently do not allow crypto as a method of funding accounts. That might change over time, and some game companies are open to the idea. For example, DraftKings (NASDAQ:DKNG) CEO Jason Robins said last year that his company would like to accept crypto as a form of payment, but state regulators are against it.
In countries that allow online casino operators to accept crypto, there are significant advantages, highlighting a potentially compelling intersection between crypto and gambling.
“The benefits of accepting crypto deposits over traditional payment channels include 1) significantly lower payment processing costs, 2) 99.9%+ transaction acceptance rates, 3) instant withdrawals, and 4) negligible chargebacks. Given the advantages of blockchain over traditional payment channels, crypto deposits are more efficient and secure as they reduce reliance on third parties while facilitating ‘trustless’ transactions,” Engel added.
Currently, permitted internet mass betting in crypto comes in the form of bitcoin or ether – the largest digital currencies. If this were to remain the case, it could have positive long-term implications for DAPP components with links to these cryptocurrencies.
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