Blockchain Technology and Cryptocurrencies – Uncovering Their Impact on the US Gambling Market with Magnus Boberg
The global market value for online casinos is expected to reach $100.9 billion in 2024 and grow to $136.3 billion by 2029. It’s a thriving industry in which cryptocurrencies and blockchain technology are playing an increasing role. The question is how big their impact will be and what challenges they face.
We’ve invited Magnus Boberg, Co-founder and Managing Director of JustGamblers and its parent company, JustMedia Ltd, to answer this question and offer his expert insights.
Interviewer (Jonathan Parker): Hi Magnus! To begin with, why do you believe cryptocurrencies will have a significant role in online gambling in the near future?
Magnus Boberg: I look at the figures for how cryptocurrencies are being used at online casinos, and I see growth. I’ll use quarter 1 of 2023 as an example. There was a 44% increase in total bets compared to the same period in 2022 and a 2.44% increase compared to the previous quarter.
Looking solely at cryptocurrency wagers for quarter 1, 2023, shows that they increased 19% from the previous quarter. So, you can clearly see that cryptocurrencies are having a significant impact.
Jonathan Parker: Interesting; what do you think is behind the growth of cryptocurrencies and blockchain technology in gambling?
Magnus Boberg: Okay, the first thing to say is that blockchain is a game changer in many industries. Having access to a mechanism for transparent data sharing where nothing can be changed or deleted without consensus from everyone in the chain is changing the way that a range of organizations do things across sectors like healthcare, supply chain management, copyright protection, and gaming of course.
North America is the dominant region in the global blockchain market, which is expected to be worth over $94 billion by the end of 2027. This is slightly ironic, given that cryptocurrencies are one of the main uses of blockchain, and they’re still not fully regulated in the US.
Jonathan Parker: Based on your experience, have you noticed some cryptocurrency trends that are significant and closely related to the online gambling industry?
Magnus Boberg: The dominant cryptocurrencies in online gambling are Bitcoin, Ethereum, and Litecoin, with Bitcoin way out in front in terms of popularity. Using quarter 1 of 2023 as an example again, Bitcoin had a share of 76% of the total cryptocurrency online gambling market, Ethereum had an 8.4% share, and Litecoin had a 5.1% share.
The growing use of these cryptocurrencies for gambling online isn’t surprising when you consider how widely they’re being embraced overall. I remember the 178% increase in usage in 2021, which jump-started a surge in cryptocurrency awareness. We’re still seeing the benefits of this.
Another factor prompting an increase in online crypto gambling is news of famous wins, such as Twitch streamer Trainwreck’s $24.7 million Bitcoin success.
Jonathan Parker: I can see why the use of blockchain technology and cryptocurrencies is growing. How does blockchain technology advance gaming, and specifically casino gaming?
Magnus Boberg: Blockchain video games have features that use specific technologies, like non-fungible tokens and cryptocurrencies. These technologies are good for gaming security. For instance, they provide transparency when making in-game transactions.
We’ve seen similar benefits in casino games. For example, cryptocurrencies are prevalent in the increasing popularity of crash gambling. Crash games are simple, and this makes them attractive to all players, including those who are new to online casinos. Cryptocurrencies add to the appeal as there’s no need to provide personal financial information when playing, so data risks are reduced.
Jonathan Parker: You’ve explained how blockchain technology and cryptocurrencies are impacting gambling in the US, but are there any challenges?
Magnus Boberg:
One of the big challenges right now is that cryptocurrency regulation in the US is still a gray area. You only need to look at the way different agencies view cryptocurrencies to see this. The Securities and Exchange Commission (SEC) wants to classify them as securities, the Commodity Futures Trading Commission (CFTC) sees them as commodities, and the Inland Revenue Service (IRS) started treating them as property in 2014.
It's such a complex legal landscape, and the same applies to cryptocurrencies at online casinos. US-based online casino operators can’t legally offer cryptocurrencies as a banking option, but anyone wanting to use cryptocurrencies can do so at offshore casino sites, except in Washington, where offshore sites can’t legally operate.
Aside from the regulatory obstacles, people are also wary about a perceived lack of stability with cryptocurrencies. This isn’t helped when you see the IMF (International Monetary Fund) warning against the adoption of cryptocurrencies as legal tender.
Jonathan Parker: I can see there are obstacles to overcome, but will they lessen the potential positive impacts of blockchain technology and cryptocurrencies in the future?
Magnus Boberg: I don’t have a portal into the future, so I can’t give any guarantees. But I’d say that the story so far is largely positive. You can see this from the fairness and transparency of blockchain technology and the growing popularity of crypto gambling, especially in sectors such as crash games.
There’s no doubt that the regulatory landscape will affect the impact of blockchain and cryptocurrencies, and there’s no way to tell which way this will go. Personally, I’m focussing on the positives, and I’d like to think that the growing use of cryptocurrencies and the transparency advantages of blockchain technology will make further acceptance and regulation more likely.
Jonathan Parker: Thank you for sharing your expertise with me. This should give our readers a better understanding of the topic.