Inside interviews with crypto gambling sites
After the recent FTX exchange failure I had to start wondering whether sportsbooks that rely on crypto for payments would suffer. I spoke to a friend who has been involved with cryptocurrency since around 2013 and has been betting with sites that accept crypto almost as long. He said that despite the hacks and failures by some crypto exchanges, he was never really spooked until the FTX failure. He told me that he keeps all his coins offline and only he and his wife know how the codes to get into his Trezor wallet. He recalls the MtGox hack in 2011 and said that because of that he decided that if he was going to buy crypto, he would only use exchanges as a necessary intermediary between himself and the gambling company.
"I considered leaving some money in exchanges but after the Canadian crypto failure (QuadrigaCX), I realized I was right to leave my coins in cold wallets. I still use Kraken to buy and sell coins and, in some instances, to get money to gambling companies, but it is all transactionary and nothing is left there for a long time. To be honest I learned my lesson in 2007 with Neteller. I had money at Neteller thinking it was as safe as a bank and had to jump through hoops to get my money back after it was seized by the FBI. I’m still amazed I saw that money again, but I think these exchanges are more vulnerable and I would be at risk to losing my coins for good. The Binance hack earlier this year had me a bit wigged out, but the FTX failure really has me spooked. To me FTX was like Bank of America. This was a huge operation, supported by celebrities with unlimited resources. To find out, therefore, that the whole thing was a Ponzi scheme and that so many people lost what could be their life savings has me sickened. Even more concerning, I worry if some of the sites I play with like Betonline or BitStarz has all their assets tied up with one of these exchanges and that I could lose everything I have in those accounts at any time. Right now I’m completely rethinking crypto and wondering if it’s just time to get out altogether."
After having that discussion with my friend I decided to reach out to a few of the gambling companies that accept crypto to find out if there is reason to worry. Two of the gambling operations that accept crypto, but convert money to fiat to play (BetAnySports and YouWager), responded and two crypto-only betting sites (FortuneJack and a site that asked not to be named in the article) responded. The answers from each were intriguing.
The first question I asked was, "With the fiasco of FTX and other exchanges are you worried that bettors' crypto deposits could be at risk? If not, why not?"
BETANYSPORTS: Regarding FTX, there is no direct threat to us or our customers, as we didn't have any investments with them. The only thing that could affect us about the FTX situation is how it impacted Bitcoin prices, but that's something that affects every and any Bitcoin holder, and it does not seem as if it will have a permanent effect on the markets.
YOUWAGER: Despite recent news we have not had any issues with crypto deposits. Most players buy and send crypto as a deposit method and are not holding it for enough time for it to fluctuate.
FORTUNEJACK: Security of customer funds is the most important thing to us. Your money is safe. You can add 2 factor authentication for added safety.
Note: When I pressed for more detail all they repeated was player funds are safe.
CRYPTO SITE X: We run our own internal exchange. We have no involvement with exchanges like FTX or Binance so there’s no concern for customers. Our reserves are also very large and because all winnings are paid in the crypto you use, bettors can be assured there is always enough coins on hand to pay them out.
Note: I posed a question on crypto betting a few years back to Heritage Sports and the manager there replied, "We were one of the first to accept crypto and established our own exchange to help facilitate the introduction of crypto early on." When I asked FortuneJack if they run their own exchange, they replied that there is no such thing and it’s not possible. This may be a topic to delve into further in a future article on crypto gambling.
The second question I asked was, "Do you think bettors are losing confidence on crypto? Are you seeing players who want to move away from crypto deposits to other methods? Are players moving from BTC to other coins?"
BETANYSPORTS: I, personally, don't think they are losing confidence, however, the fallout of the FTX situation (if that's where this question is coming from) has not reached us, neither directly, nor indirectly through our customers, for us to be able to say for sure if customers have lost confidence, but from our perspective, it does not seem to be the case. As for other methods, it does not seem to be the case either. We are receiving and sending the same amounts of Bitcoin that we usually do. And as for other coins, since we use only BTC, we're not able to say what other coins our customers use.
YOUWAGER: The crypto deposit count has raised every year and recently it is no different. BTC remains the most popular coin to send. Other big coins are Litecoin (LTC), Ethereum (ETH) and DogeCoin (DOGE) but are used much less. We have not seen a noticeable switch to other coins recently. However, it has been more difficult to convert depositors of other methods to crypto recently, as recent news may be affecting new adopters.
FORTUNEJACK: We haven't seen a decrease in confidence. I think bettors see the current fiat prices of realize cryptocurrency isn’t going anywhere. We convert all deposits to mBTC (microbitcoin) for play, although the customer will receive their winnings in the crypto, they deposit with. We currently accept BTC, LTC, ETH, DASH, USDT, USDC, XDG, TRX and ZEC. Bitcoin will always be the most popular, although ETH and LTC are close.
CRYTPO SITE X: We aren't the least bit worried. People who play with us know that crypto isn’t going anywhere despite a few bad actors. We accept most currencies and while BTC and ETH are the most popular, I see a lot of people playing with DOGE. I think you can thank Elon Musk for that.
"With the massive decline in the price of crypto vs fiat in the last year, is it possible that those who bet long term futures could actually lose money even if they win?"
BETANYSPORTS: That's a difficult thing to ascertain, however, it does not seem to be the case. BTC deposits are credited as fiat into customer's accounts, so any changes in Bitcoin prices will not affect the account's balance once the money is in there, hence, any losses due to BTC price falls would be felt at the moment the deposit is made, and only during the time frame between the moment the funds are sent and the moment the funds reach us, which is not a long time frame (a few hours at worst, since most deposits come through very quick, and most changes in Bitcoin prices are felt with longer time frames).
YOUWAGER: While players fund with crypto, the account balance is stored in USD. As mentioned, crypto depositors are not investors and just buy and send. We instruct players to leave the funds in crypto for as minimal amount of time as possible, which in most cases is a matter of minutes.
FORTUNEJACK: It’s not a concern. Bettors will be paid.
CRYPTO SITE X: I don’t think many of our customers look at the current fiat price at all because they are holding their crypto long term. If you bet a team at 20/1 odds to win the Super Bowl in September for, say 1 LTC, then you’ll receive 20 LTC when it settles in February. Who cares how much a LTC is in relation to the USD at the time if you aren’t planning to sell your cryptocurrency? And if you are, it can go up just as easily as it can go down. If you think about it, the USD could be worth a lot less against other currencies in that time frame but it has no effect on your buying power and that’s all that matters.
The fourth question I asked was, "Do you see any emerging alternatives to crypto or fiat moving forward?"
BETANYSPORTS: For the time being, we will continue using Bitcoin as our only cryptocurrency for both deposits and payouts.
YOUWAGER: We have not had any players ask about having their account funds stored in anything other than USD.
FORTUNEJACK: Other than central bank cryptocurrencies, I don’t see any new coins we are anxious to accept any time soon. We made a managerial decision on which coins we were interested in and are happy with that decision.
CRYPTO SITE X: We evaluate this regularly. As long as the coin has been around for a while and there is a demand for it, we will allow players to deposit with it. There seems to be a rising demand for ADA in the last few months for some unknown reason along with XLM. We are looking at the central bank coins and a few others, but we will not accept any deposits using the numerous scam coins being created.
The fifth question I asked was, "Several companies are moving to using the Tether (USDT) stablecoin. Is that also available to your users? Have any players switched to this crypto currency?"
BETANYSPORTS: It is not, and since the only cryptocurrency we accept is Bitcoin, we're unable to say how many of our customers also use other coins, stable or not.
YOUWAGER: We offered Tether for a long time and removed it due to lack of interest, but are reintegrating it and will offer it again very soon.
FORTUNEJACK: We accept USDT and USDC. We have some players using them, but most still bet with BTC, ETH and LTC.
CRYPTO SITE X: We accept all stablecoins including Tether.
I also I asked the sites was whether the recent move to legalization of sports betting and online casinos in the U.S. has had any negative affect on their business. I decided not to post all the answers since each one emphatically said "no". That’s not surprising since bettors are quite loyal to a company they believe in, value and trust.