The Dark Side Of Crypto Casinos: An Examination Of Online Gambling With Cryptocurrency

Here’s what you need to know before you make bets on crypto casinos.

As of 2021, the global online gambling market has reached a staggering US$57.54 billion. The mainstreaming of blockchain technology has been a driving force behind this growth, particularly with the use of cryptocurrency in online gambling. With faster transactions and enhanced security measures, cryptocurrencies have become a favorite among gamblers seeking anonymity. 

As a result, many casinos have started incorporating crypto into their businesses. According to ‌blockchain analytics company Chainalysis, there are 70 crypto-friendly casinos in the U.S. alone, holding a total deposit of US$2.8 billion. Despite the growing popularity of crypto gambling, there are significant risks involved. Here is a look at some of the potential drawbacks of this trend. 

Insufficient regulation

While some governments, like the European Union and India, are planning to regulate the use of cryptocurrency, it remains illegal in many countries, including China, Indonesia, Russia and Turkey. In some countries like the U.S., while cryptocurrency itself isn’t illegal, crypto gambling has been banned. This means that in a lot of countries, there isn’t any scope for creating regulatory policies for crypto casinos. As a result, players who encounter any scams or fraud may find themselves without any government body to report the matter to and get help.

Even in cases where crypto casinos do have a gambling license, these licenses are often issued by jurisdictions with lax regulatory requirements. As per independent casino database Casino Guru, many crypto casinos are licensed by the government of Curaçao, a former Dutch colony in the Caribbean, which is known for having relatively weak regulatory requirements and customer protection. This can leave players vulnerable to unscrupulous operators who take advantage of weak regulations to engage in unethical practices.

Price volatility

The world of cryptocurrency is notorious for its volatility. The value of cryptocurrency changes very dramatically over a short period of time, making it a risky investment. To put this in perspective, the value of Bitcoin on December 31, 2021, was US$46,224.39, but as of December 11, 2022, it was trading at US$17,176. 

This fluctuation can either work in your favor or against you when gambling. If the price of your cryptocurrency increases, you might win more than you expected. But if you lose a bet, and crypto prices go up, you will lose more than you intended to bet. 

Anonymity 

While anonymity can be a boon to those who don’t want to share their personal information when making transactions, it has major downsides too. Anonymity makes it easier for the casino to scam you out of money, as there is no paper trail or way to verify the legitimacy of the transaction. In such a case, it would be difficult to hold the casino accountable and track down who your money went to. 

Besides, the lack of verification makes it impossible to ensure the age of the gambler, enabling minors to access these crypto casino websites. This could lead to serious consequences, including addiction and financial ruin, for young people who are not yet equipped to make sound decisions about gambling

Gives way to addiction

The lack of regulation and oversight in the crypto casino industry may also give way to addiction for some individuals. This was exemplified by the case of UK-based Twitch streamer “ItsSliker” who admitted to scamming his peers and the Twitch community to pay off his crypto-gambling debts in September 2022. ItsSliker duped many people into sending him over US$200,000 and approached other Twitch streamers for money by claiming his account was blocked. Following the incident, some Twitch community members demanded that the platform ban crypto gambling sponsors.

According to a gambling addict who spoke to NBC News, gambling in crypto casinos might be even more dangerous than traditional online gambling sites. This is because crypto casinos lack the anti-addiction mechanisms and oversight in place to protect their customers. 

Those who struggle with compulsive gambling may bet in an attempt to recoup their losses. For them, gambling at casinos can be an addiction. It is crucial for online casinos to have mechanisms in place to help prevent and treat gambling addiction. However, many crypto casinos do not have such safeguards, leaving vulnerable individuals at risk of developing a gambling problem.

So, is there no safe way to be on crypto casino sites?

The lack of regulation and anonymity of crypto casinos can make them a risky choice for gambling enthusiasts. However, it doesn’t mean that there are no safe options available. 

One of the first things you should do is research the website you are playing on. You can look at reviews of the website on Google or search for it on Reddit communities like r/Bitcoingambling to find credible information.

Things like a website’s layout and design also give you a fair idea of its credibility. If a website looks like it had been put together in a quick haphazard manner, chances are that it is a scam. Also keep in mind that if things look too good to be true (e.g. the website is offering you a big bonus or reward), it probably isn’t the best idea to use it. 

You should also be vigilant about where you are holding your cryptocurrency when you are playing in a crypto casino. Instead of using a crypto exchange wallet, you should hold your crypto inside your computer or cold storage. Also, never deposit any money into the casino’s website before checking its terms and conditions, particularly details on licensing and third-party auditing (or the lack thereof). 

Lastly, you can always look for casinos that have responsible gambling measures in place. These measures can include self-exclusion options, deposit limits and time limits. They are designed to help you practice responsible gambling habits and to prevent you from developing a gambling addiction. 

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