Since it was created more than a decade ago, bitcoin has found itself caught in the unenviable nexus between exciting innovation on the one hand, and controversial disruptor on the other.
Whatever the view on the cryptocurrency and the blockchain technology that underpins it, both have found a real-world use in gaming, thanks to the benefits they offer both players and operators.
These benefits are especially relevant at a time when operators globally are grappling with the fallout from Covid-19 and slowing regional economies. In Asia, Macau gaming revenue is at all-time lows, while an extended shutdown may have cost South Korea’s largest casino almost half a billion dollars.
Indeed, the current backdrop of social distancing offers even more validation to actively pursue a digital strategy, with crypto providing an added boost.
The take-up of blockchain is evident in the proliferation of crypto operators in recent years, with more than 200 currently active casino platforms, according to The Bitcoin Strip, which collects data from major players in the space. Online gaming has expanded at a double-digit rate each year in the past decade, and at least one research house believes that cryptocurrency will help the segment grow by US$114 billion through 2024.
While more established gaming companies might view the growth of these platforms as yet another competitive threat, there is merit in examining the unique advantages and cost savings blockchain confers, at a time when many operators are embracing innovation to get an edge, or simply to stay in the race.
“Even with all this global uncertainty, there are things that we can do, things that we can offer, which are available only because of blockchain,” said Camilla Wright, a spokeswoman for Cloudbet, one of the oldest sportsbooks in crypto gaming.
Founded in 2013, the Curacao-based operator used the English Premier League’s recent return to demonstrate how cost savings generated by blockchain allowed it to offer commission-free bets on all 92 remaining matches in the competition. Beside building goodwill with customers, the promotion allowed players to bet with the fairest odds on the street.
Crypto operators like Cloudbet can afford to give up their margins to offer such prices because blockchain allows them to avoid substantial costs that fiat operators have to bear. Firstly, the cost of processing customer deposits and withdrawals through a blockchain are a fraction of the international payment processing fees faced by fiat currency operators.
Eyebrows were raised in the crypto world earlier this year when bitcoin transaction fees climbed to a two-year high during a period of unusually high blockchain activity. While some blockchain operators drew some community ire over the prices at the time, fees have since fallen - to a median of $0.65 as of July 13, data compiled by BitcoinFees.cash show. In the fiat world, the biggest U.S. banks charge an average of $15-$25 for individuals to receive funds from overseas, according to one study.
The tradeoff for a fiat gaming operator with an international user base is whether to let the customer bear the cost, or to wear it in the name of goodwill.
“That problem is much less significant for a blockchain operator,” said Wright.
Big-name fiat sportbooks and casinos also have the additional hurdle and cost of having to deal with chargebacks - another challenge blunted by blockchain. Owing to the immutable nature of the technology, payments are indisputable once they’re cryptographically sealed within a block of crypto transactions. While customers need to be educated about this immutability and what that means for their payment decisions, it means operators can avoid chargebacks and fraud that costs merchants around the world billions of dollars each year.
There are also other widely touted advantages of blockchain that enhance the gaming experience for players: Faster transaction times (minutes or seconds, rather than days), secure fund storage (through the creation of cryptographic keys) and privacy protection.
All in all, crypto builds upon the reach that a smartly planned digital strategy can offer to operators, which might be more relevant now as anecdotes emerge about the impact of Covid-induced lockdowns, especially to land operators.
“The world we live in today has accelerated land-based casinos to actually think about integrating online gaming,” said Joe Pisano, the CEO of Philippine-based Jade Entertainment and Gaming Technologies. Within that segment, “crypto is quickly becoming a critical component. Although many focus on the anonymity and quick transactions it provides, cryptocurrency will be one of the major factors in the convergence of online and offline casinos.”
In Macau, monthly casino gaming revenue plunged 97 percent in June from a year earlier (though venues might gain some respite as China’s Guangdong province lifts travel restrictions on the border it shares with Macau). Meanwhile in South Korea, local financial analysts estimate Kangwon Land Casino’s almost five-month closure has cost it more than 550 billion won (US$460 million).
Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.
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