How Blockchain Wallets Are Handholding Casinos to the New Age
Players resort to gambling to have fun, but it is not uncommon for them to keep whizzing between the casinos to determine who is offering the better deals. And if you ask casino operators, they will swear running these is a devil’s work.
Thankfully, blockchain technology, transforming the core of industries across the world, is now set to press the change button for the gambling industry. Let us examine how blockchain-induced wallet solutions could make things better for all stakeholders in the industry – casino operators, players, and regulators.
But before throwing the examining light, it will help to examine the issues prevalent in the casinos and sportbooks:
Regulation/Compliance
Handling regulation is always difficult for online casinos as different countries have varied legal parameters. Governments in various countries have imposed or proposed regulations that mainly focus on how the industry markets itself. Some countries have put in place stringent regulations such as determining minimum bet amounts and an extension of KYC policies. (AML procedures talked about seperately) On the other hand, there are countries that approach it with minimum required regulation. Even the most reputable casinos find it hard to deal with undulating regulatory framework.
AML procedures
Criminals and the unscrupulous find casinos an ideal place to legitimize their ill-earned money. In regular casinos, they would buy chips with dirty money, spend some time on the floor without actually playing, and then exchanging chips for money. When authorities tightened screws on such behavior, laundering syndicated developed where some people would be the helping others in laundering.
New methods developed with the emergence of online gambling. One of the techniques used by them is chip dumping, where several players would lose willingly to a player in an online card game, thus transferring all their money to them. The winning player will simply cash out with all their winnings.
These activities have brought casinos under the sharp watch of the authorities which have put in place stringent AML (anti money laundering) procedure to prevent them. In 2018, the UK Gambling Commission warned five online casinos that they could lose their licenses if they didn’t do enough to stop money launderers from using their website.
Cash Out
An obligatory part of casinos’ offer, cash out often becomes the reason of misunderstanding between the casinos and players. The latter feel that their game includes not only the actual play but also the precise time to take their cash and exit. They have to time something that can logically never be right. How can you time it precisely when don’t know which upcoming games you may end up winning or losing?
Casinos would generally fetter the cash out mechanism with bonuses and wagering requirements. Though they roll out lucrative bonuses to draw players, players are required to complete the wagering requirements before they are able to withdraw their money. To use an example, if you deposit £100 and receive a 50% deposit bonus, you will immediately earn £50. However, if the wagering requirement placed by the casino is x25 of the total deposit amount, you won’t be able to cash out unless you bet (£100x25) £2,500. Players have to complete the bet in a limited time to avoid bonus cancellation.
If the players haven’t gone through T&C, these requirements would result in frustration among players.
Payment & transfer of money
Ask players about their top pain-point and most will reply — payment & transfer of money. This may become a migraine if they want to transfer money to another country. As gambling laws vary in each country, cashing out or transferring all the money to a particular bank is always an issue. Despite winning the money, the players do not always control it as they do when using their bank’s app. Tracking of money on the move is also hard for regulators.
Problem Gamblers
Problem gambling is an impulse-driven behavior to gamble regardless of the desire to stop or negative consequences. The excitement caused by the first big win, often brought by luck, generates adrenalin rush that compels people to continue playing despite the losses. The craving can have severe consequences as players would need money to feed their addiction.
Casinos are legally mandated in the UK and a majority of jurisdictions around the world to protect problem gamblers. They run the risk of attracting huge fines if they fail in protecting such customers.
Now that you are aware of the challenges faced by casinos and sportbooks, let us now see how blockchain-based solutions can resolve these. It is quite interesting to note how a technology that was supposed to bring revolution in finance, moved into gambling, which is a unique space in itself.
How a blockchain-based wallet can be a remedy for issues prevalent in casino industry
A blockchain-based wallet, thanks to its inherent features, has the ability to resolve the issues mentioned above. All financial transactions of casinos as well as players move to an immutable, distributed ledger, bringing in transparency. Moreover, a custom blockchain-based wallet can be developed specifically for the gambling industry.
Casinos can opt for a blockchain-based solution for a custom casino token. The players would cash in and cash out the winnings in crypto, which they can later exchange to a crypto or fiat of their choice.
What a casino works on is likely to be a permissioned blockchain linked a KYC database. The regulator may be keeping a constant watch on the activities in the blockchain by acting as a node. Players would be acting within the parameters of a smart contract which is a set of pre-programmed automated actions. The smart contract would provide players a secure and transparent access to their account, facilitating their transactions. In case someone borrows from another players, the transaction will be immutably registered on the distributed ledger.
The blockchain will also make cashing out a pain-free process. Anyone who decides to cash in or cash out will just have to scan a QR code and verify the transaction via their chosen method (fingerprint/face). The smart contract will take care of the payment in an automated manner once all other conditions are fulfilled without any involvement from the other users.
Introduction of a blockchain-based system will be advantageous for all parties involved, whether it is casinos, players, or regulators:
ü Casinos get high level of financial security
ü Players are able to execute cross-border transactions seamlessly.
ü Players enjoy full ownership of their money which becomes highly liquid.
ü P2P transactions, such as borrowing, can be done with ease in a transparent manner.
ü Regulators can incessantly keep a watch on the process.
Casinos-specific blockchain projects
For gambling industry, blockchain arrived a bit late. Thankfully, when it did, it brought in some real solutions which have had the potential to end the woes of all stakeholders in the industry. A few worthwhile projects include Vox Wallet, CasinoCoin, and FunFair.
While all these solutions have useful set of features, Vox Wallet stands out for its vision, combining the players’ verification and rewards with the AI solutions with the core wallet functions. The wallet provides for full KYC / AML checks in advance and players don’t have to go through the process every time they want to play at a new casino. To casino operators, the wallet provides better customer understanding and prior identification of customer profiles. They are confident about compliance as verification checks are incorporated into the wallet. AI-induced insights help casinos in dealing with problem gambling.
Closing thoughts
From blockchain-based accounting and tokenized fiat to crypto cashouts, the blockchain can be a powerful tool for enforcing responsible gaming. Blockchain-based wallets help the casino industry get over the prevalent issues like compliance, cash out, transfer of money, and problem gambling. No wonder if the blockchain takes over the industry in the coming years.
