Gambling companies may soon feel the drawbacks of pushing too hard with cryptocurrency after stock falls in Bitcoin, Ethereum and other cryptos wiped $400bn off the industry.
US casinos and sports betting firms have been working for years on ways to incorporate crypto into their establishments. Many offer crypto as a form of payment for gambling chips, which can then be transferred back as profits at the end of a session. Others have gone the whole nine yards and set up dedicated crypto casinos.
But in an industry where the value of currency can rise and fall in and instant, some casinos are facing a reality check over investing too heavily in crypto.
What’s Happening With The Crypto Crash?
Cryptocurrencies have been losing value since a peak in November 2021 and Monday saw the market fall back below its $1tn valuation. In just the past week the market has seen $400bn wiped out, with the likes of Ethereum (ETH), Cardano (ADA), Solana (SOL) and Dogecoin (DOGE) losing upwards of 25% value in just 24 hours.
That’s even worse than Bitcoin’s suffering and shows just how strained the industry is right now. It comes as tech stock also falls – and there is concern that a correlation between the two could drag both industries down.
Analysis believe the sell-off of crypto is due to inflation fears in an already volatile market.
The fall in stock price has resulted in some cryptocurrencies blocking their shareholders from withdrawing or cashing in coins. Crypto lender Celsius said: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts.”
This led to another exchange, Binance, to halt its withdrawals. Binance processed $1.2tn in crypto spot and derivatives trades last month alone, but would not explain further why it had put on the temporary blockers.
Yet the freezing of withdrawals from these lenders could lead to a further reduction in crypto share price across the board, as seen last year when the UK’s Football Index platform collapsed in on itself days after it froze the assets of customers.
This could be a rough weekend for #crypto. #Bitcoin looks poised to crash to $20K and #Ethereum to $1K. If so, the entire market cap of nearly 20K digital tokens would sink below $800 billion, from nearly $3 trillion at its peak. Don't buy this dip. You'll lose a lot more money.
— Peter Schiff (@PeterSchiff) June 11, 2022
Why Is This Bad For Casinos?
The big worry now for the casino industry is how these fresh stock falls affect business. It is estimated there are around 70 crypto-friendly casinos and sportsbooks operating in the US, although many of these also sidestep regulations to reach customers. There is also a growing footprint of crypto in sports, where its influence is set to grow.
For legit casinos that use crypto – such as Resorts World Las Vegas – the worry will focus on how popular their new infrastructure is, if Bitcoin and the like keeps falling in value.
Casinos still haven’t worked out a surefire way to let players ‘buy’ chips with crypto, gamble with said chips, cash those chips back in for crypto, and all the while ensure the currency hasn’t significantly shifted in value during this time.
Crypto is still in its infancy. Bitcoin may have first been minted in 2009 but the industry is not regulated like the US dollar is. And that means there are fewer protections for gamblers wishing to bet with crypto.
