Online gambling

How bitcoin opened up a new world of online gambling

In the United States, online casino gambling is illegal in all but six states, controlled by strict rules that make it difficult for users to transfer money in and out of regulated internet casinos.

But those rules don’t hold so well when it comes to bitcoin.

Online casinos that offer users a way to gamble using cryptocurrencies are on the rise, circumventing regulations while operating and advertising with impunity. Dozens of websites operating outside the United States now offer a way to quickly start playing, many with few user background checks.

“This segment has exploded in a very short time, and as a decentralized system, it’s even harder to know how to pursue them,” said Alex Costello, vice president of government relations at the American Gaming Association. , a trade group that lobbies on behalf of US casinos and registered sports betting companies.

“We’re a highly regulated industry for a reason: anti-money laundering issues, responsible gambling issues,” Costello added.

Those with a gambling addiction have another reason: a lack of mechanisms to stop them from gambling. A gambling addict who spoke to NBC News but asked not to be identified said crypto casinos don’t offer the same addiction-mitigating features as traditional gambling services, like the ability to s ‘to prohibit.

“I had done everything I could locally to stop myself from doing it, and all of a sudden there was this Hail Mary,” he said. “I could self-exclude 20 times and it wouldn’t make a difference because you can just go back and make another account.”

Online gambling has greatly increased in recent years, both in the United States and abroad. Twenty-two states and Washington, DC have legalized online sports betting. Online casinos that operate outside of the United States and legally serve Americans must register with each state they operate in and often go to great lengths to verify the physical location of their customers. They accept deposits by credit cards or wire transfers, in accordance with federal regulations to prevent money laundering.

Cryptocurrencies are also in the midst of their own boom, with companies scrambling to sell bitcoin, ether, and a variety of other digital assets. According to a recent NBC News poll, one in five Americans have invested in, traded in, or used a cryptocurrency.

Crypto casinos are also booming. Advertising all kinds of casino games, these websites often use typical payment methods such as credit cards in addition to bitcoin and ether, which can be used on digital versions of slot machines and roulette. All crypto-casinos that NBC News interviewees are not based in the United States, which makes government surveillance difficult.

“Online gambling that is not connected to a larger criminal network has been seen as a lower priority for limited government resources,” said John Holden, an assistant professor at Oklahoma State University who studies the gambling regulations.

This could change as the crypto-casino market grows. A survey by Chainalysis, a blockchain analysis company, has revealed that there are around 70 crypto-enabled casinos currently in operation and they have received around $2.8 billion so far this year. . Last year, the industry raked in $10 billion, according to Chainalysis, a 64% increase from 2020.

There is no state where such gambling is legal.

“To date, no state has permitted direct gambling with cryptocurrencies,” Holden said.

A brief internet search would bring up crypto casinos as just another internet service.

Platforms like Twitch and YouTube are filled with influencers encouraging people to use specific gambling sites that accept cryptocurrencies and with instructions on how to use a virtual private network to access sites that block people from certain countries. Sponsored content on the websites of several US media companies, including Orlando Magazine, Men’s Journal, TheStreet.com, Mercury News, and others, has recently promoted top crypto casino rankings. Most of the websites promoted in these publications explicitly prohibit people in the United States from gambling.

But many of these websites make little or no effort to ensure that these rules are followed. Some only require an email address for registration, allowing users to send cryptocurrency to fill their account and start playing almost immediately.

Many casinos do not verify where visitors are coming from or are accessible to anyone using a VPN to route their internet connection through another country.

Costello said the American Gaming Association raised concerns with the US government, but hadn’t had much luck.

“We’ve had conversations with federal law enforcement and state law enforcement about this issue,” Costello said. “Unfortunately, federal law enforcement is a little crippled because these people are obviously unregulated, not registered in the United States, and often not based in the United States, which often doesn’t allow for a easy pursuit.”

Crypto-casinos can be particularly harmful for people addicted to gambling, said Keith Whyte, executive director of the National Council on Problem Gambling.

“Crypto gambling just piles risk on risk,” Whyte said. “They are unregulated and therefore likely to be unscrupulous operators with little or no consumer protection.

The addict who spoke to NBC News said crypto casinos caused him to relapse after he previously quit gambling. After identifying he had a problem, he signed up for a service that allows people to prevent themselves from playing preemptively at any registered casino or sportsbook. But he still watched gambling content online and, through their promotions, discovered crypto-casinos as a workaround to blocking. He then started buying cryptocurrency legally to fund his accounts.

Not only was there no way to stop, he said, but the websites also had none of the safeguards in place that often prevent addicts from making wild bets.

“It might not be so helpful if you’re in a frenzy of play. But it’s the fact that there’s a potential stoppage there,” he said. “While with crypto casinos, they really don’t care. They don’t have a care in the world.

The drug addict, who said he had since quit gambling altogether, said he eventually went into debt tens of thousands of dollars before admitting to his family that he was a drug addict.

“Something needs to be done about it, but that’s the crypto sphere,” he said. “What can you do, finally?”