I was recently invited to speak to a group of state and tribal gaming regulators about cryptocurrency and its role in the payments industry. As we talked through “gas” and “mining,” I was struck by the parallels between cryptocurrencies and casino loyalty programs. Loyalty points are essentially bitcoin by another name.
Decades ago, gaming regulators educated themselves about loyalty programs and how a casino operator manages these systems to incentivise players. These programs are now well regulated, monitored and accounted for worldwide. There’s no reason why the utilisation of cryptocurrency for regulated gaming in the US can’t be similarly embraced by the industry.
Gambling with cryptocurrency, like most innovations, has both opportunities and challenges. The pros – transactions occur rapidly, including immediate withdrawal and/or deposit; transactions are not reversible, meaning there are no chargebacks; and few overhead fees. The cons – transactions can still be relatively anonymous and crypto currency values are highly volatile.
There’s no doubt that players are interested in crypto as a payments option. According to the American Gaming Association (AGA), 5% of all casino visitors would be interested in using cryptocurrency as a funding method, rising to 10% of all frequent customers and going even higher with 20% of all high- frequency and high-spending customers. Casino patrons’ expectations are clearly evolving, and the industry must evolve with them. For cryptocurrency to be considered a legitimate payment option in regulated gaming, stakeholders must engage with gaming regulators, as well as state banking oversight bodies.
The more proactive and forward-thinking gaming regulators have a “bring it on” mentality — they’re ready for crypto’s integration into the gaming industry. The Colorado Division of Gaming and the Wyoming Gaming Commission are great examples. They have supported and passed legislation allowing crypto payments platforms to engage with regulated gaming and promulgated rules to enable acceptance. Wyoming signed House Bill 133 into law last year, recognising crypto as an approved asset convertible to cash for online sports betting – becoming the first state in the US to allow cryptocurrency as a funding method for sports betting accounts. Likewise, Colorado’s Governor recently announced that the Centennial State is poised to accept tax payments in crypto.
There is also a sizeable group of regulators right behind Wyoming and Colorado, those willing to be innovators and embrace emerging gaming technologies. These state regulators generally consider crypto a prospective payment method with potential. Nevada fits this category well. The Nevada Gaming Control Board has adopted a cautious approach to non-fiat currencies. During a recent Joint Interim Standing Committee on Revenue hearing, Nevada Gaming Control Board Chairman Brin Gibson encouraged the gaming industry to bring its proposals forward for discussion and review. Without a federal framework around crypto and its status as legal tender, Nevada and other state regulators are taking a conservative approach.
All of this certainly reinforces the need for federal guidelines, and the Biden Administration’s Executive Order compelling federal agencies to research the topic was a welcome step. Pay close attention to any legislation introduced by Senators Lummis and Gillibrand, who have been leading behind-the-scenes discussions on a federal framework.
Federal guidance would provide much-needed clarity on the appropriate use of cryptocurrency for gaming and create a more robust domestic environment for legal, regulated crypto gaming. One of the major challenges with current cryptocurrency exchanges and providers is that they are not US-based, and, as such, may not necessarily adhere to US anti-money laundering policies and US banking laws.
Overall, the one common thread among regulators is a desire to embrace best practices for gaming and the protection of our patrons. Just like the introduction of loyalty programs and digital payments within casinos, I’m confident that cryptocurrency will meet with the same reaction from gaming’s regulatory bodies — with some healthy skepticism and a willingness to learn more.
