Bitcoin Has Become a Widespread Online Gambling Payment Method
Bitcoin is becoming a more common payment method for underground betting sites, according to Naomi Brockwell of Bitcoin Center NYC. Brockwell recently spoke on camera with John Stossel, the Emmy Award winning TV journalist for Fox News.
Bitcoin is a currency ready-made for online gambling. In fact, about 50% to 60% of all bitcoin transactions involves gambling transactions. According to Brockwell, players are using the deposit and withdrawal method more often, because it makes money transactions which involve online betting safer.
When gamblers use bitcoin payments, charge-back fraud cannot happen. All bitcoin transactions are irreversible, so now charge back transactions can happen.
Underground Internet Gaming
The virtual currency often is also used for underground gaming. The U.S. government targets the financial institutions which facilitate illegal online gambling. They target the middlemen who make the entire industry run, using the 1961 Wire Act and the 2006 UIGEA to prosecute those involved in transactions.
With bitcoin transactions, no such intermediary is used. Instead, the gambler communicates with and makes payments directly to the gaming operator. Under such circumstances, the government has a hard time targeting a facilitator.
The online currency is used at a variety of gaming sites. While bitcoin is most famous (or infamous) for its widespread use in the sports betting industry, it is also used for online casinos and card rooms.
Tyler Wilson is the CEO of Bitcoin Sports Trade, a website which uses the payment method exclusively. Wilson says, “The emergence of bitcoin has allowed us the opportunity to create an online sports-betting platform that makes it 100% more convenient for US sports bettors in a variety of ways.”
The problem is, most bitcoin online casinos and card rooms are illegal. Online gambling is licensed and legal in only three states: New Jersey, Nevada, and Delaware. Players in 47 other states and most U.S. territories are engaging in illegal activity when they gamble on the Internet. While the federal authorities have never prosecuted an online card player, one cannot say they will not in the future.
Hard to Trace Activities
Even though the activity is harder to trace, that does not mean it is impossible for legal authorities to trace bitcoin transactions, if they want. The Silk Road case proves that the anonymity of bitcoin and the deep web does not assure protection from legal prosecution.
Of course, the gaming operators who own these sites do not host the sites in the United States. The vast majority of them do not live in America. Most of them operate offshore gaming operations, often in the Caribbean. Others operate across the Atlantic Ocean, where the attitudes to gambling are often less moralistic.
Predictious Sports and Proposition Bets
“Predictious” is an Ireland-based website which takes bets on sporting events and proposition bets. What makes the site stand out from so many others is the fact all payments are made in bitcoin. Predictious only launched in July 2013, but the site is now used enough it gets international media coverage. Americans make instantaneous gaming transactions using the currency, which did not exist before 2008.
What Is Bitcoin?
Bitcoin is an online currency which is not backed by gold, silver, or other precious metals. More remarkable, bitcoin is not backed by treasury notes. The monetary system came about in 2008 and 2009, when receiving traditional cash became harder. The wealthy panicked and began hoarding money, so online vendors with a cash flow problem found a new way to handle currency.
Since then, the handiness of the currency for online transactions has made it the preferred method of pay for many tech savvy merchants. It has become a new pop culture phenomenon. One Philadelphia doctoral student paid for his entire college education using bitcoin. New York City brokerages have launched bitcoin hedge funds. It is seen by many as a legitimate way to move money electronically.
The anonymity of bitcoin encourages illegal operators to use the payments, though. The drug trade on Silk Road is just one example. The many illegal gaming sites online–Satoshi, Bitcoin Sports Trade, Predictious– are more examples.
Whether bitcoin is the future of currency is a matter of debate. Some financial experts view the currency as unsound, too prone to fluctuations. The hostility governments have for bitcoin poker transactions is obvious. Yet others see that hostility as an advantage, perhaps even bitcoin’s saving grace. If this new form of trading value is to remain, expect some fine tuning to take place. Scandals might happen, followed by improvements. Whether the currency is the future of online commerce will be left to all other things on the Internet: finding a niche in the mass market.