Chapter: 9

Decentralization in Online Gambling


Cryptocurrency allows gamers to have frictionless transactions and a personalized gaming experience. The seamless integration of cryptocurrency with online gaming is becoming a key catalyst in the gaming frontier.

But as cryptocurrencies offer ideal methods for secure transactions, they may also allow for more fraud and criminality to occur. By its nature, crypto enables anonymity, which makes anti-money laundering (AML) and Know Your Customer (KYC) programs essential. We anticipate nations taking increasingly strident measures to curtail criminal behavior in the crypto space and for approved and unapproved forms of crypto to be more clearly delineated.

Blockchain and Deposit Security

Blockchain is a decentralized, immutable ledger that ensures data integrity and security. Blockchain technology has revolutionized many industries and is foundational to cryptocurrency and non-fungible tokens (NFTs). Because blockchain can record an immutable record of every transaction between the player and the gaming operator, we expect to see increasing usage of blockchain technology in online gaming transactions.

Increasing Popularity of Virtual Assets

In gambling, the use of non-fungible tokens (NFTs), or non-transferable tokens, is increasing. NFTs are unique digital assets that are stored on a blockchain and allow players to trade and earn rewards using virtual assets in the gaming ecosystem. NFTs are enticing to players who want to win something unique that they have exclusive ownership of and whose value might increase.  In essence, it adds another dimension to gambling by paying out prizes that are in and of themselves another gamble. As a result, iGaming platforms are taking notice of the increased interest in NFTs and are beginning to offer them as special rewards.

Technically, NFTs are not currencies, so gambling with them is not “gambling” in the strictest sense. But NFTs can be converted into currencies, so in practice this qualifies as gambling. Currently, many jurisdictions have no laws that specifically target NFTs, but we expect this to change sooner rather than later. For example, in April 2024 France defined a new category of games called “JONUM” — games with monetizable digital objects such as NFTs — so that it can regulate them through the Bill on Securing and Regulating the Digital Space (the “SREN Bill”).

Peer-to-peer iGaming

The first decentralized iGaming experience began in 2011 with SatoshiDice. It allowed for simple digital dice rolling and proved the technical viability of peer-to-peer iGaming. Since then, numerous games and platforms have evolved and been created that have taken this concept to new heights. In many countries with strict anti-gambling laws, the decentralized gaming ecosystem is gaining in popularity. It offers players greater control of their gaming assets and prioritizes transparency as an important aspect of their gaming experiences.

This trend shows no sign of slowing down in 2024. Fueled by an undercurrent of cryptocurrency adoption, new platforms may well emerge allowing for greater freedom — and greater danger — for players. The downside of unregulated peer-to-peer gambling is that there is no enforcement body to catch and penalize potential cheaters, and though the ethos is one of open transparency, often this is co-opted by criminal elements intent upon exploitation. We believe the general trend in this arena may well be one of enforcement crackdowns.

Tokenomics and Community Governance

Web 3.0 casinos embrace tokenomics and community governance, which fosters a sense of ownership among players and contributes to the sustainability of gaming platforms. This approach rewards players who gamble more, play more and are more active within their communities. Some social scientists argue it’s also rewarding addictive behavior. Despite the potential for negativity, this kind of community fostering and sense of ownership is crucial for iGaming establishments who don’t possess the classical infrastructure of owner/operator or corporate iGaming operations.

Disclaimer: This report contains information only for educational purposes and is not intended to be legal or financial advice. Readers are encouraged to do their research and seek professionals in these fields for more guidance.

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