March 13th, 2013
Via Forbes, an interesting article on an online gambling company’s decision to accept bitcoin as a currency for their games:
WinPoker in Curaçao announced that it will now begin accepting bitcoin as a deposit and withdrawal method to their WinPoker accounts which are on the iPoker network.
Consisting of over 30 different brands, including large European bookmakers like Paddy Power, Bet365, Betfair and William Hill, iPoker is the largest network of online poker rooms operating internationally. According to Pokerfuse, iPoker sits behind only the independent rooms PokerStars, Full Tilt Poker and PartyPoker in terms of cash game action.
The attraction of bitcoin to the online gaming community is obvious. Funds clearance is near immediate and the transactions are irreversible. Payment processing fees are a fraction of what they are compared to other payment methods.
James Lewis, Head of Poker Games for WinPoker, says, “We can take very small or very large deposits quickly, with little or no risk of fraud. As a result, players can access our games from areas of poor financial infrastructure, or can play exciting high stakes games quickly without waiting for a bank wire transfer to be processed.”
WinPoker has structured the process so that players choosing to utilize the bitcoin payment method do not also assume currency risk along with the inherent risk of casino gambling. Therefore, all bitcoin deposits convert into the user’s account currency (USD, EUR, or GBP) at the current market rate without currency conversion fees and then funds are credited to the player account within minutes. When processing a withdrawal, funds are converted back into bitcoin is credited to players’ bitcoin e?wallets. No currency conversion fees are charged at any point in the process.
Although bitcoin has optional anonymity properties that would protect the identity and country of the player, those properties are not leveraged by WinPoker. As a licensed and regulated gaming operator, WinPoker must adhere to the regulations of the jurisdiction that they operate within. Lucas explains:
Due to regulatory requirements, and to prevent fraud, collusion, money laundering, and ensure a safe and honest gaming environment for our players, we are required to adhere to strict KYC and AML policy. Players are required to produce documents to verify their identity, address, and source of funds where relevant, before they are able to withdraw any funds.
Of course player identification would be required when a real-money, licensed casino mingles bitcoin with other online payment methods that include legal tender.
The jurisdiction-less SealsWithClubs, which competes in the poker space as a bitcoin-only site, is not concerned about the news from WinPoker. “The bitcoin poker space will explode in 2013, so it’s something that is totally expected when I see other online poker rooms and casinos transitioning to bitcoin,” says Bryan Micon of SealsWithClubs.
Micon adds, “In this particular case, it doesn’t excite me all that much because first off no U.S. players are allowed and secondly WinPoker is only using bitcoin as a deposit option, not as a currency to gamble for.” When bitcoin is the currency of record and unit of account for gaming, it is less likely that funds could be frozen or confiscated through the actions of one of the casino operator’s bank accounts.
Another significant but less noticed advantage of using bitcoin ‘tokens’ directly as the gaming unit is that before a game can be declared gambling for regulatory purposes, there has to be real money involved. In the case of bitcoin, a strong case can be made that, even with secondary markets, certain virtual currencies lack the legal elements of material value and property.
When I asked Micon about future regulation of his play money bitcoin poker room, he said “I’m confident there will be other U.S.-facing, bitcoin-accepting poker sites in the near future and SealsWithClubs is growing extremely fast. As for licensing and regulation, it is something we are always exploring.”
This entry was posted on Wednesday, March 13th, 2013 at 2:04 pm and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
