Thursday, July 07, 2022

Operators turn to bitcoin as an alternate route into Asia’s online markets


Cryptocurrencies such as bitcoin are providing online operators with a new route into the Asian markets that have historically proved tough to penetrate due to the lack of conventional banking options.

According to management consultants McKinsey & Company, around 2.5 billion people worldwide are unserved by banks. In Asia, the unbanked account for almost 60 percent of the total adult population.

There is a substantial crossover between this 60 percent and Asia’s growing middle classes, who for the first time have access to mobile devices and disposable income, but lack the banking facilities required to participate in real money gaming. The opportunity is clearly substantial.

“Bitcoin itself has no borders and therefore [allows players to] make a deposit online, easily and quickly, with no need for a bank account or any other e-wallet,” said Oron Barber, CEO of Australia-based bitcoin media and marketing agencyCoinPoint.net.

While bitcoin tends to be framed in terms of potential when it comes to the gaming industry in Asia, Tim Heath, CEO of bitcoin platform provider Coingaming.io, said it is already making a significant material contribution.

Heath said that the brands using the Coingaming platform, including BitCasino.io, are currently doing volumes that would place them alongside Europe’s Tier 2 operators on scale, and are also growing at a considerably faster rate than their fiat currency competitors.

Another bitcoin brand which runs off the Coingaming platform, Sportsbet.io, told AGB in August that Asia accounted for around 40 percent of global betting volumes for the operator during the summer’s European Championships.

Opening new markets

The bitcoin opportunity for gaming operators spans just about the entirety of Asia, including a number of markets where traditional online operators have struggled to make much progress.

For the time being, China remains the largest single bitcoin market in the world, but both Heath and Barber pick out Indonesia as a jurisdiction which has witnessed a significant boom in bitcoin betting. Malaysia, Thailand, Cambodia and Laos have similarly enjoyed upticks.

There has also been growth in more developed Asian economies, including Japan and South Korea. Earlier this year, Japanese lawmakers passed legislation that required virtual currency exchanges to be regulated by the country’s financial services authority.

“Japan and South Korea have been early adopters,” said Heath. “These are markets where young gamers are digital natives who expect to be able play in currencies that better fit into their digital ecosystems.”

Similarly, across markets where the majority of sports betting continues to rely on a network of land-based agents, particularly India, bitcoin offers the prospect of securely digitising exchanges in a way that won’t exclude those participants without banking options.AGB also understands that Pakistan and Iran are undergoing significant bitcoin betting uptake in recent months among a middle class previously locked out of online gaming by banking restrictions.

Bitcoin operators have  enjoyed success in a number of these markets not because they have necessarily marketed directly to players, but because bitcoin provides the most secure and accessible way to gamble online.

Barber atCoinPoint.net said that he knows of Malta-licensed operators enjoying strong growth in markets including Vietnam and Thailand simply because they have a strong product and have enabled bitcoin payments.

Regulatory outlook

There have been some encouraging signs from a regulatory outlook for bitcoin within the gaming space. In August, the UK Gambling Commission announced it would be adding digital currencies, including bitcoin, to its list of acceptable payment methods from November. AGB understands a number of other regulators are considering similar moves.

Within Asia, the CEZA in the Philippines has also shown a willingness to license bitcoin gaming providers. However, bitcoin gaming regulation does remain hamstrung by an overall lack of progress in broader online gaming regulation across the region.

“The regulatory outlook is uncertain. There is some talk but no concrete signs of progress,” said the CEO of bitcoin affiliate Bitedge.com. “The most likely outcomes are that bitcoin will be treated like a foreign currency. So in jurisdictions where gambling online with a foreign currency is illegal, gambling with bitcoin will also be illegal.”

The difference, however, is that the nature of bitcoin makes it tougher for regulators to prohibit those operators willing to enter Asia’s grey markets by blocking transactions on a payments level.

“There are several high quality bitcoin sportsbooks and casinos offering anonymous accounts from any jurisdiction with all the advantages that bitcoin brings,” added.

Challenges ahead

The primary challenge for bitcoin gaming in Asia remains one of education.

Adoption of bitcoin tends to be focused on a small, tech-savvy segment, and while the currency is gaining acceptance within the financial sector, general perceptions are not always favourable. Canning noted that the opportunity for operators will likely only grow in step with wider general adoption of bitcoin.

This process will be aided by more operators entering the bitcoin market. Barber said he sees new operators offering bitcoin gaming on a weekly basis, many with an Asian focus.

For Heath, this will only continue. He lists a number of benefits bitcoin offers operators, including the ability to accept micro-deposits without having to charge punitive transaction fees. There is also a significant reduction in fraud and chargebacks compared to fiat currencies, allowing operators to compete on price without eating into margin.

For the time being, bitcoin gaming growth in Asia has been driven by a new breed of operators focused on the digital currency, including BitCasino.io and Cloudbet, but the region’s major online operators are understood to be looking closely at entering the space.

“Bitcoin offers a degree of flexibility that perfectly suits emerging Asian gaming markets,” Heath said. “It is opening up a huge number of players in Asia’s fast-growing middle class who have a small amount of disposable income for the first time and would like to game.”

With bitcoin gaining greater regulatory and popular acceptance, it will likely play a central role in the continued development of online markets across the region.



 

 

 

 

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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