Wednesday, August 17, 2022

Can Asia be the driver for mainstream crypto gambling adoption?


*By Ed Brennan

As the adoption of blockchain-based crypto-enabled platforms gathers momentum in iGaming, a persistent question continues to come up: what is going to be the catalyst that drives the adoption of this new technology among mainstream casino operators and their players? The answer may well be quite simple: gaming in Asia.

While the intersection of gaming and blockchain users is still relatively niche in the West, I predict that Asia will be fertile territory for a marriage of the two.

Further afield, widespread adoption is still in its infancy. If cryptocurrency and blockchain is analogous to internet technology, we’re still in the early 90s. The world over, there’s a tremendous amount of education required and indeed scepticism to be overcome, but Asia will likely be the catalyst.

Worldwide there are approximately 25 million users of crypto, many of them originating in Asia. There are also hundreds of millions of online gamblers in the world. Again, many of them originate in Asia.

In my view, what makes this such a good fit is the fact that the Asian market is ahead of the curve when it comes to crypto adoption.

Awareness is far more prevalent in Asia too, and more importantly, the crypto regulatory markets are far more developed and sophisticated in the majority of countries than many places in the West.

South Korea is not only home to the most active cryptocurrency exchange in the world, it is also the third-largest market for Bitcoin trading and responsible for 35 to 40 percent of global Ethereum trading. Put together, Japan, South Korea, and Vietnam account for a phenomenal 80 percent of global bitcoin trading. South Korean regulators are also implementing regulations that will outlaw anonymous trading.

In Japan, in a bid to increase transparency and consumer protections, regulators have officially approved the operation of 11 exchanges and 17 currencies for trading. Australian legislators are also evaluating laws that would place the regulation of cryptocurrencies in the purview of AUSTRAC, the country’s financial intelligence agency.

We believe strongly that operating in regulated markets is the place to be. As markets become regulated, the adoption by players in those markets increases. Married with this is the far greater proportion of Asian participants in iGaming, which makes it a fantastic opportunity for reaching the mainstream.

However, while the opportunity is undoubtedly there, we need to take some lessons from the wider world to realise there are also significant challenges ahead from which Western operators can learn. Looking at Uber’s performance when moving East provides a good example. One of the reasons Uber looked to exit the region so fast is that they did not localise their go-to-market approach.

Uber’s failure was principally because it did not successfully build a product catering to a Chinese customer-base. Despite the large sum of money it poured into the Chinese market, it was still losing market share to Didi, a local competitor. Analysts suggest that Uber should have gone to market with a local partner such as Didi, rather than going head-to-head with a leading local provider. When it comes to crypto-enabled iGaming, the same approach needs to be done.

Currently, most Western-orientated crypto companies do not apply a traditional tech-based go-to-market strategy when trying to expand into other regions. Instead, most choose to leverage their ‘global communities’ and incentivise regional token holders to do local marketing and encourage them to find more token buyers in the region. Granted, this is a great idea for those who want to make a quick buck, but not so efficient for ones who can sustain a platform.

The same holds true for us and will present the greatest challenge for crypto’s adoption in the Asian gaming market. Establishing awareness and legitimacy around the industry is also going to be essential, even in a such a region that is more crypto-friendly than the rest. Partnering with a local operator will no doubt be the way forward, which will enable a far more tailored offering to local audiences.

Given the store of value in Bitcoin and other cryptocurrencies on the market, growth will happen when both the operators and players can see the benefit, of which there are undoubtedly many - player trust, the ability to negate fraud, the speed of transactions and transparency.

The early and quick adoption of cryptocurrency in the region, coupled with the rapid regulatory response by regional governments ultimately bodes well for the global cryptocurrency market. I believe it’s going to be a marriage made in heaven as adoption begins to pick up.

* Ed Brennan is President of CashBet.

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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