Bitcoin has come a long way since the first real-world transaction saw a user spend 10,000 bitcoins to purchase two Papa John’s pizzas on May 22, 2010. The uptake and value of bitcoin have increased tremendously since then.
As of this writing, more than 180,000 transactions take place per day with each bitcoin valued at $610. PayPal, the Apple App Store and Expedia (to name just a few) now accept bitcoin payments. And more recently, an original series based on a fledgling crypto currency startup debuted on Sony’s Crackle:
The online betting industry has been particularly quick to adopt bitcoin for reasons that make sense given the industry’s highly-regulated and quasi-legal status around the world. Bitcoin is nearly anonymous, transactions are processed instantly, fees are minimal and national governments have been flummoxed in their attempts to control the currency.
Bitcoin is a Headache for Lawmakers and a Boon for Gamblers
Bitcoin-friendly betting sites have proven especially attractive in countries where local gaming laws make it all but impossible to place real money wagers over the internet. The USA, Turkey, Russia and many other nations have implemented financial controls seeking to prevent financial transactions to and from online gambling sites.
While we don’t recommend contravening your country’s gaming laws, many people in nations that seek to prohibit online betting have turned to bitcoin as a means for making deposits and getting paid. The decentralized nature of bitcoin has made it extremely difficult for governments to put a stop to real money gambling.
Prior to the widespread adoption of bitcoin, gambling sites that accept customers from restrictive countries had to come with all kinds of “creative” accounting methods in order to process transactions without earning the attention of authorities. Declined deposits, delayed payouts, monthly withdrawal limits and high processing fees were just a fact of life for gamblers in certain countries.
That has all changed with bitcoin. Now, even players located in the most anti-gambling of nations can make instant payments and receive their winnings with just a few clicks of the mouse. For players in certain areas, betting with bitcoin hearkens back to the early days of online gambling before all those prohibitive laws came into effect.
Operators and Players Are Saving Money with Bitcoin
Even in countries where online sports betting is legal, gambling-related transactions are considered high risk. Payment processors charge gambling operators high fees for accepting deposits and those fees are often passed on to players. The situation is even more dire for players in restrictive countries where the legality of online betting is questionable at best.
In some locations, it not unheard of for players to pay upwards of $30 for a wire withdrawal and as much as $50 for a withdrawal via check in the mail. By contrast, Bitcoin transaction fees are minimal – usually in the range of $0.10.
Startup costs are likewise minimized for operators looking to take up bitcoin. Developing a relationship with a traditional payment processor is an expensive prospect in the world of gambling. Credit card merchants, e-wallets and other payment processors typically take a percentage of every transaction, and sometimes throw in a flat fee on top of each transaction for good measure.
Bookmakers also benefit from bitcoin deposits not being reversible. Chargebacks are more common in online gambling than in just about any other industry due to the nature of the game. It is not uncommon for someone with unhealthy gambling habits to make a deposit, lose their money and then call their credit card company to ask for a reversal. Once a bitcoin deposit is made, that transaction is final.
Bitcoin is Not Perfect
There is one major drawback to betting on sports with bitcoin: it is a volatile currency. The daily price fluctuations of bitcoin can still set you up for a wild ride. Just a couple days ago, the price dropped from $628/btc to $599/btc. On the flip side, bitcoin can also suddenly jump in value.
Certain types of people don’t mind the fluctuations at all. While the price can drop unexpectedly, it can also rise randomly to give you a nice little “free” bonus when you go to cash out. As some people say, using bitcoin is like “gambling while you gamble.”
The price fluctuations of Bitcoin can wreak havoc for people who practice strict bankroll management techniques. If you’re the type to strictly stick to bets equal to, say, 5% the size of your bankroll, a suddenly change in price and have you suddenly betting more than you intended. This is a problem if you have some of your bankroll sitting in a bitcoin wallet somewhere in the form of bitcoins and a portion of your bankroll sitting in your online betting account in the form of US dollars, GBP or any other currency.
Is Bitcoin worthwhile?
It depends. Bitcoin offers major advantages for anyone living in a country whose laws make it difficult to move money to and from online bookmakers. The ease of depositing and withdrawing is so refreshing if you have had to deal with the hassle of declined credit card deposits, expensive cashouts and delayed withdrawals.
If you live in a country where online betting is either legal or completely unregulated, bitcoin doesn’t offer as many advantages. It can be fun to play around with, but there’s no need to deal with it if you can just as easily make instant credit card deposits or use an e-wallet such as Neteller to move your money back and forth.
Wes Burns co-founded BettingWebsites.com, bringing 15 years as a gambling industry expert to the team.