The trade-off is clear. Regulated businesses offer durable, if slower, returns and build genuine institutional equity value. Unregulated peers deliver rapid ROI but sacrifice longevity and rarely accumulate lasting equity.

For years, investors accepted this sustainability vs. speed equation. Recently, however, the “regulated markets offer certainty” argument has collapsed spectacularly.

Whatever happened to the grey?

The distinction between regulated and unregulated is now binary. Enforcement risk and institutional pressure have made operating in between untenable. Bet365 made headlines last May as bankers circled and liquidity-event rumours intensified. The backdrop: withdrawals from India in 2023 and China in 2025. Analysts estimated around £185 million in lost Chinese revenue – a trade-off the company appeared willing to accept to refocus on fully regulated markets.

Bet365’s retrenchment underscores that institutional-scale operators can no longer justify regulatory ambiguity – and how quickly crypto challengers move to occupy the space. Stake, BC.Game and other crypto-first platforms have expanded aggressively, serving global audiences from offshore jurisdictions.

Below is a Google Trends chart which shows a stark reality of the bleed from Bet365 to Stake over the past three years.

In 2025 we witnessed eye-watering valuations for unregulated crypto iGaming startups, often trading at parity or even a premium to regulated peers. Capital is impatient. With leverage expensive and M&A markets weak, allocators prioritise near-term cash generation. The traditional “safe” bet is being strangled by red tape and legal frameworks that squeeze onshore margins and stretch ROI timelines. As players and affiliates migrate offshore, liquidity and capital inevitably follow.

The protagonist: Tax and compliance burden

In key markets, the public take now exceeds 50% of GGR on certain products. Pennsylvania taxes online slots at 54%. New York takes 51% of sports-betting revenue. Germany taxes turnover on slots and poker, forcing operators to cut RTP and pushing players to unlicensed sites where their money goes further. The Netherlands hiked its online gambling tax to 34.2% this year and 37.8% in 2026. These policies wreck channelisation. Players chase value; affiliates chase traffic; investors chase cash.

Governments treat online gambling like tobacco or alcohol, forgetting that gambling lives on a borderless internet where VPN use is second nature (global data shows VPN penetration exceeding 40% in several key iGaming territories). Tobacco and alcohol cannot be consumed online (joking aside).

By copying policies built for physical vice markets, regulators ignore the elasticity of demand. When taxation and restrictions rise, players don’t stop gambling; they simply move to unregulated sites that offer better odds and familiar product features. Over-taxation and blunt restrictions will ultimately reduce treasury revenue while undermining player protection. Offshore operators often ignore responsible gaming tools and aggressively target vulnerable users. Until policymakers wake up, the gap between the regulated and unregulated sectors will only widen.

Reality cheque, please

Today’s hot thesis promises juicy yields, but is it worth the risk? Australia offers a sobering reminder. Since 2017, the ACMA has blocked approximately 1,000 illegal sites, resulting in more than 200 offshore exits.

One rule change or a coordinated payment squeeze can flip economics overnight. Crypto is no invisibility cloak – blockchains are traceable. The moment value hits a KYC off-ramp, identities attach. That limbo leaves a paper trail.

So why are valuation multiples converging? Two forces are at play: First, public-market compression: Regulated gaming stocks trade at roughly half the multiples of average tech peers, reflecting regulatory headwinds and slower growth. Private regulated deals anchor even lower. Public buyers can’t pay up without diluting their own stock unless synergies are ironclad. That structural ceiling compresses valuations across the regulated M&A chain.

Second, cash-yield hunger and scarcity. Unregulated valuations are driven by capital rotation and simple supply-demand dynamics. Investors are buying yield streams, not future listings. They price cash-flow yield, not blue-sky equity. The strongest bids go to businesses with high double-digit growth, minimal capex, unrestricted product features and borderless reach.

Unregulated assets can still sell, but the buyer pool shrinks with scale and multiples drop to low single digits. Policy sets the spread. Turnover taxes and GGR rates above ~35% crush onshore margins. Ad bans and product restrictions inflate CAC and shrink LTV.

Germany compounds the pain with stake limits and strict advertising bans, making market recovery nearly impossible. The result is more capital chases grey cash cows while they last.

The US has delivered shocks before: UIGEA (2006) and Black Friday (2011) reset online poker overnight. A similar jolt would reprice unregulated assets.

Operator signals matter. Tim Heath pioneered crypto-first betting withSportsbet.io and Bitcasino; his public pivot toward licensed frameworks is telling. If you want a strategic exit or institutional capital, play by the rules. The market ultimately rewards cash-generative and licensable over cash-generative and opaque.

What’s persistent, what’s transient?

Persistent (micro): As long as regulators overreach, then high taxes, blunt limits, weak channelisation and a vacuum remain. Nimble unregulated players will fill it, and risk-tolerant capital will fund them for yield.

Transient (macro): 2025’s volatility should fade (absent black swans). Falling rates and looser liquidity typically lift gaming equities. Cheaper capital also makes regulated cashflows more valuable, pulling pricing back toward licensed, auditable businesses. In the near term, quality assets may see narrow spreads; overtime, the premium should drift back to licensed operators as enforcement and traceability tighten.

As liquidity cycles turn, risk capital will again chase the highest yields, until policy/enforcement resets the spread. Each cycle brings the same lesson: yield can price anything until it can’t. Every yield has a half-life; know which one you’re buying.

Takeaway for capital allocators?

Don’t overpay for cash cows. If equity value and capital appreciation are capped, price for run-off, not fairy-tale exits. Price the licence. Value credible paths to regulated revenue; without them, expect earnouts and holdbacks. Audit the rails. Payments and AML posture determine bankability – weak rails mean a governance discount.

Assume traceability. The “anonymous” premium is gone. Investment always sits somewhere on the risk spectrum. Just make sure the reward justifies the ride.

BEN ROBINSON is managing partner of Corfai and an entrepreneur, investor and adviser with over 25 years of experience in iGaming, payments, tech and media. Since entering iGaming in 2009, Ben has led a global publishing business, co-founded and exited a crypto exchange and, through establishing RB Capital and Corfai, completed over 20 transactions and raised millions in investment capital.

Super Group made the announcement on Thursday, with the purpose-built ZAR Supercoin to operate under a new division of the business called Super Money SA. The digital wallet is expected to launch in Q1 of next year.

The stablecoin will be used as a payment option for its Betway sportsbook brand, with the business looking to capitalise on the growing popularity of blockchain. An in-house cryptocurrency was first hinted at during Super Group’s Q2 earnings call, with CEO Neal Menashe saying the payments system could help mitigate high operating costs and leverage the growing popularity of crypto among consumers.

Africa’s stablecoin volumes are estimated to be worth around $100 billion across key markets, the company said.

The new blockchain-focused segment will also introduce a new Supercoin Wallet with the hopes it will provide a smoother payment process for the population in South Africa and the wider continent.

Alinda van Wyk, Super Group chief financial officer, said now was the right time for the company to move into the crypto space, due to the growing demand for convenient payment solutions.

“We have always been at the forefront of tech advancement in the gambling industry and this offering will also benefit the millions of customers who enjoy our brands in South Africa and in the rest of the continent,” Van Wyk said.

“The launch of Supercoin will position us for continued success, as alternative payment methods and digital asset frameworks become more integrated into the regulated gaming ecosystem. This also underscores our commitment to innovation and the use of advanced technology to position Super Group for sustained growth.”

Super Group’s Supercoin listed on Luno in SA

The stablecoin will be listed on leading regulated cryptocurrency exchange Luno and will be made available to customers in South Africa initially, the company said. As it gains traction, it will be added to other exchanges across the continent.

Tier 1 South African bank ABSA Group will hold custody of the Supercoin’s fiat currency backing reserves. The ZAR Supercoin will be deployed on the Solana blockchain, while Chainalysis will provide compliance solutions so that Super Money can establish risk policies and monitor transactions.

Growing acceptance of crypto

In a post-Q3 earnings call earlier this month, Menashe said the launch of its stablecoin marked a “significant and strategic step forward” in the company’s approach to payments.

“We intend Supercoin to be more than just a rewards tool,” Menashe explained. “It marks a crucial first step in integrating digital assets into our product stack.”

He said the wallet option would provide customers with a seamless and secure way to store, send and transact using Supercoin. “We expect it will lead to cost efficiencies over time,” he added.

Interest in crypto within the regulated gambling space has been heating up of late, particularly after Yolo Group announced in September that it was bringing its crypto casino brand into regulated markets.

At the time, Yolo said its decision was in part down to crypto becoming “mainstream”, with iGaming and sports consultant Stefan Kovach recently telling iGB: “Having been in the [crypto] space for seven, eight years, it’s definitely moved beyond a very core niche into something much, much bigger.”

This week, UK Gambling Commission CEO Andrew Rhodes also highlighted the increasing interest in crypto among gamblers. In a speech to industry CEOs, he cautioned the government could no longer overlook crypto gambling.

He refrained, however, from suggesting the UK might soon grant licences for crypto-based betting, emphasising instead that new regulatory measures must be established by policymakers.

“As a group, we’re deliberately shifting away from that short-term cash mindset,” Falzon tells iGB.  

She says the company is leaning on its “truly unique” technology platform to drive its new strategy.  

“It’s highly agile, allowing us to enter new markets quickly and deliver exactly what customers want,” Falzon tells iGB. “We believe that, combined with our ecosystem of live studio, slots and aggregation products, this agility gives us a strong advantage.  

“In the regulated space, this means we can move faster than competitors, adapt to local requirements efficiently and provide a superior, compliant experience for players.” 

In September, Yolo announced it would incorporate its Sportsbet and Bitcasino brands into the single Yolo.com brand, which it would utilise to target Tier-1 regulated markets. 

Yolo has already secured two gaming-related vendor licences for its Hub88 Holdings and Live Online Gaming Services subsidiaries in the UAE. These licences will allow Yolo to supply iGaming content to the regulated market in the UAE.

With Yolo having enjoyed a hugely successful period as an unregulated operator, the move away from grey markets raised questions over how exactly the company would manage this seismic shift. 

Shift from quick-buck mentality 

In its announcement the company said it had a responsibility to bring the crypto casino experience to regulated domestic markets. 

This has necessitated a cultural shift for Yolo, and Falzon describes the strategy change to one of heavy regulatory compliance as “by far the biggest hurdle”. 

“In terms of changes, I think the biggest one is mentality,” Falzon explains. “I’m not saying we’re done yet.  

“Historically, our business has operated at a pace of speed, speed, speed – let’s get the money, let’s move fast. But when you’re dealing with regulators, it’s a completely different world. 

“There’s a lot of paperwork, processes and procedures that we have had to implement. It requires patience and discipline, and it changes how people think – some initially resist because it doesn’t feel immediately revenue-generating. But that’s part of the regulated environment and embracing it has been a major shift for us.” 

A long-term financial outlook for Yolo Group

Falzon raises an interesting point on margins, with iGaming and sports consultant Stefan Kovach previously telling iGB that Yolo’s strategy change could “significantly impact” its profitability, at least in the short term. 

But this is something Yolo is well aware of, says Falzon, and it has formed a large part of its strategy.

“I believe it’s about more than just margins – it’s really instant cash versus long-term valuation,” she adds. “It’s the million-dollar question that many business owners ask themselves: do you prioritise immediate cash and dividends, or focus on building sustainable, long-term value?  

“We’d rather invest in creating a robust, high-value proposition that positions Yolo for growth, stability and leadership in regulated markets over the long term.” 

Will Yolo Group face increased scrutiny from regulators? 

In the announcement of its plans, Yolo acknowledged domestic regulators “are not keen” on operators continuing activities in other pre-regulated markets. 

Elizabeth Dunn, partner at UK law firm Bird & Bird, suggested Yolo’s previous position as a grey-market crypto operator could raise concerns among Tier-1 regulators. 

“Regulators in most Tier-1 markets continue to struggle with the idea of operators directly accepting cryptocurrencies and/or being funded through cryptocurrencies,” Dunn previously told iGB. 

“Yolo’s history as a crypto-first operator is, therefore, likely to come under scrutiny when regulators are assessing its suitability to hold a licence.” 

But while Falzon emphasises the strategy change hasn’t been an “easy ride”, Yolo’s collaboration with regulators has made the transition smoother. 

“I believe proactive engagement, transparency and collaboration is paramount,” Falzon says. “We are not shy of our crypto origins; it defines who we are. However, at the same time, we want to collaborate closely with regulators, educating them about our platform while learning about their concerns.  

“By working together as a team, we can find a middle ground that ensures player protection, transparency and compliance, while allowing our technology and ecosystem to deliver the best possible experience for our players.” 

This week, UK Gambling Commission CEO Andrew Rhodes warned the government cannot ignore crypto gambling.

However, he stopped short of saying the UK could soon issue licences for crypto-based betting, instead stating the government must take steps to regulate the activity.

“That is a challenge that probably didn’t really exist a few years ago, or not at this level,” he said during his “CEO Briefing 2025” speech this week. “What I thought was a five-year-away problem, perhaps a year or two ago, I think is now an 18-months-to-two-years challenge.”

Rhodes addressed several issues facing both the regulator and the market in general, with crypto gambling among the areas of focus for the commission.

He said growth in cryptocurrency use among younger demographics has led to a “pressure building” within the system. Rhodes added that in years to come, a “significant cohort” of consumers will use crypto regularly as this is what they will have become accustomed to.

As to the impact on gambling, Rhodes said it could serve as a demographic shift, whereby these consumers “have no place in legitimate industry because of the currency they use”. As such, he said action needs to be taken now to prevent such issues in the future.

No plans for Gambling Commission to license crypto

Despite such concerns, Rhodes stopped short of suggesting licences could soon be issued for crypto-based gambling. He said the government must first take steps to regulate such activity, with the commission’s role to enforce laws being set in Parliament.  

“This is going to have to be government-level discussion,” he said. “It is a government-level decision because once you open that door, you cannot close it.

“It brings questions around are you considering crypto as a source of wealth? Are you considering that as a source of funds? What conditions would you put in place? What are the risks and how do we manage that?

“But the reality is, and this growth in those demographics means, I don’t think governments can ignore that pattern. And it’s good to see the Financial Conduct Authority are doing a lot of work in looking at how we might create a regime for this.”

Rhodes flags concerns over funding for commission

Rhodes also used the speech to set out other issues for the regulator moving forward. These included a concern over funding for the commission and an overdue fees review.

The commission is funded solely by fees and does not receive any taxpayer funds. However, its fees are not linked to inflation or uprating, meaning the funds agreed during the last review may not be in line with current spending requirements.

A review is due every five to seven years and was scheduled to take place in 2024, in line with the far-reaching white paper. However, with this having been pushed to the end of 2025, Rhodes has aired his concerns over the funding of certain measures in the interim period. He warned that the regulator’s funds could be exhausted by mid-2026.

“This does mean the extra investments we have made in areas like illegal gambling, criminal investigations and data capabilities, among other areas, are not funded beyond the middle of next year, as they have been funded from our excess reserves built up in 2021-22, which will now be exhausted,” he said.

“Just as there is a very active debate about taxation and the sector at the moment, there is also a very active debate about the role of regulators and ‘arm’s length bodies’ and to what extent we stand between you and growth and to what extent we ensure a level playing field, which will no doubt be a consideration for the government as it considers the commission’s future programme,” Rhodes told sector representatives.

“Our programme over the next year is to continue this work as much as we possibly can, while we await an outcome from the pending fees review.”

Gambling Commission remains committed to tackling illegal gambling

Despite these concerns, Rhodes was steadfast in his praise of the regulator. He set out the commission’s ongoing work to counter illegal gambling in the UK and the work the regulator has done to block unlicensed operators.

During the financial year-to-date, the commission has issued 480 cease-and-desist notices to advertisers and operators. It has also reported 188,297 URLs to various search engines and seen 104,192 URLs removed as a result.

Meanwhile, some 659 websites were referred to search engines for delisting. In addition, the commission has disrupted 504 websites so that they have either been taken down or geo-blocked in the UK.

“We’ve been extremely active in this space and in talking to a huge number of regulators around the world we haven’t found any that have invested in the way that we have,” Rhodes said.

“Nonetheless, for the avoidance of doubt, because every time I give a speech, there are people who will pore over it and feel the need to tweet about it, we have been extremely active in this space. But we know we don’t have coverage of all the risks that are out there.”

Apprehension started to mount in February over the possibility of Ohio Republican Brian Quintenz becoming the next chair of the CFTC. Quintenz, a former CFTC commissioner nominated that month by US President Donald Trump, had direct ties to prediction markets as a sitting board member for Kalshi. Additionally, Quintenz publicly advocated for another exchange, ErisX, in its failed attempt to offer sports contracts in 2021.

Now, Quintenz’s nomination has been pulled after multiple hiccups, and Trump this week announced a new nominee: Michael Selig. Selig’s expertise is cryptocurrency, from both a regulatory and legal perspective.

While the gaming industry has been focused primarily on prediction markets, the Quintenz-Selig shuffle could signify that crypto is the real prize at stake. Yet with Quintenz also heavily involved in crypto himself, it could also just be more of the same.

Who is Michael Selig, the new CFTC chair nominee?

Selig currently serves as chief counsel of the Securities and Exchange Commission’s Crypto Task Force and as a senior advisor to SEC Chair Paul Atkins. Back in 2014-15, Selig also worked in the office of former CFTC commissioner J Christopher Giancarlo, per LinkedIn.

Giancarlo was a commissioner at the time Selig worked for him, but he went on to become CFTC chair in 2017 during Trump’s first term. He has since adopted the nickname “Crypto Dad” for his support of digital assets and published a book under that title in 2021.

David Sacks, Trump’s so-called “AI and Crypto Czar”, said in an X post that Selig has “been instrumental in driving forward the President’s crypto agenda” at the SEC, adding that he and Selig will “deliver on President Trump’s promise to make the US the crypto capital of the planet”.

In response, Selig posted that he would “work tirelessly to facilitate Well-Functioning Commodity Markets, promote Freedom, Competition and Innovation and help the President make the United States the Crypto Capital of the World”.

Quintenz nomination lost early momentum

Quintenz’s candidacy, if charted on a prediction market, might look like something of a bad beat. It started strong, but the longer his nomination dragged on without confirmation, the more things started to unravel.

Quintenz faced questioning during a Senate hearing in June and his confirmation vote was twice delayed afterward, both times abruptly and at the last minute. In July, the release of internal CFTC emails through a FOIA request from The Closing Line newsletter suggested undue access for the yet-unconfirmed Quintenz.

Then, billionaire crypto twins Tyler and Cameron Winklevoss got involved, leading Quintenz to distance himself in September by posting threatening messages he had received from Tyler. The messages claimed the CFTC “abused” its power in previous legal action against Gemini, the twins’ crypto trading platform.

“It’s my understanding that after this exchange they contacted the president and asked that my confirmation be paused for reasons other than what is reflected in these texts,” Quintenz posted on X.

The White House pulled his nomination on 30 September before nominating Selig weeks later.

CFTC chair candidates share multiple similarities

Between the two nominees, Selig has fewer direct connections to prediction markets than Quintenz. But there are some connections, and Quintenz’s crypto experience ultimately could make the two more similar than not.

According to InGame, Selig’s name appears on a July 2024 letter submitted by venture capital firm Paradigm Operations to the CFTC in support of Kalshi’s legitimacy as a prediction market.

Kalshi had not begun offering sports contracts at the time, but Paradigm argued that “the CFTC’s characterisation of political contests, awards contests and sporting events as forms of ‘gaming’ is arbitrary and capricious”. Selig was among three attorneys from the firm Willkie Farr & Gallagher LLP representing Paradigm. The VC firm would go on to invest in Kalshi this year.

Quintenz, for his part, is also heavily involved in crypto. He became an advisor to Crypto.com months after leaving the CFTC in late 2021, and he spent the past four years at Andressen Horowitz (or a16z), a crypto-focused VC firm. Since late 2022, Quintenz has served as its head of policy for crypto. His tenure as a CFTC commissioner also aligned with Giancarlo’s tenure as chair.

Based on these points, it remains to be seen whether gaming stakeholders would view Selig as a more favourable candidate by comparison.

Regulatory questions at play for CFTC, SEC

Since Trump took office for his second term in January, crypto advancement has been a key goal for the administration. The GENIUS Act, the most significant regulatory bill for digital assets introduced in the US to date, was signed into law in July. Another similar bill, the CLARITY Act, passed the House in July but has been sitting in the Senate since September.

Prediction markets have not seen the same level of legislative or regulatory clarity. Acting CFTC Chair Caroline Pham hosted a meeting with tribal gaming stakeholders earlier this year but did little to assuage their concerns. In an advisory issued in late September, the CFTC gave no concrete guidance and essentially said it has yet to determine the validity of sports contracts.

In the meantime, the influx of new crypto rules could put the SEC and CFTC in tough spots with regard to oversight and delineation. The agencies have historically been independent of one another. As their names suggest, the SEC primarily oversees securities like stocks and bonds, while the CFTC oversees commodities and derivatives.

Various forms of digital assets like crypto might not fall neatly within one box or another. Notably, Selig has had intimate dealings with both agencies in his career thus far.

The two agencies in September held a unique roundtable discussing possible regulatory synergies. Among the panellists were Kalshi’s Tarek Mansour and Polymarket’s Shayne Coplan, although neither participated much. Crypto interests were also well-represented by officials from Crypto.com, Robinhood and Kraken.

Before Selig’s nomination, a sense emerged among observers that the SEC’s Atkins was gaining momentum as a potential CFTC chair candidate as well. Such a consolidation would have been unprecedented, but the subsequent roundtable was perhaps an indication that their relationship is aligning closer.

Crypto interests dwarf prediction markets

The true breadth of the CFTC’s remit was perhaps best shown in Quintenz’s Senate hearing. For almost two hours, lawmakers presented questions about agriculture, ranching, commodities, crypto and, to a much lesser degree, event contracts on prediction markets.

That divide in priorities seems to be more apparent as the saga plays out. It was the crypto-focused Winklevosses, not the collective furor of the regulated gaming industry, that proved to be Quintenz’s downfall, and perhaps for good reason: the crypto market this summer eclipsed a total market value of $4 trillion.

By comparison, nationwide gross revenue this year from casinos, sports betting and iGaming combined was $51.1 billion through August, per the American Gaming Association. Sports betting, the vertical most closely associated with prediction markets, accounted for $10 billion of that.

Prediction markets are also small in scope when compared to crypto’s trillions. Leading exchanges Kalshi and Polymarket are garnering multibillion-dollar valuations but there are few other significant players as of yet. Additionally, gaming companies like FanDuel, DraftKings and Robinhood have already launched or are planning to launch prediction markets, which could saturate the market.

Prediction markets make money off trading commissions and other transaction fees. As such, the exchanges often see billions in weekly trading volume (not directly equivalent to sportsbook handle) but their revenue is only a small fraction of that.

Notably, though, prediction markets do not have to pay state gaming or federal excise taxes, nor do they have responsible gaming obligations to answer for.

Trump administration connected to both sides

The connections to both crypto and prediction markets are everywhere in Trump’s administration. Donald Trump Jr is an advisor to both Kalshi and Polymarket, having endorsed them after they correctly predicted his father’s election victory last November. 1789 Capital, a firm backed by Trump Jr, invested in Polymarket this year.

Things went a step further this month with the announcement that Trump’s media arm will offer prediction markets through a partnership with Crypto.com. The contracts will be available to users directly through Trump’s Truth Social platform.

Trump is constructing a $300 million ballroom at the White House that was privately funded by 37 donors. The donor list featured some traditional gaming stakeholders but is littered with crypto connections, including:

• The Winklevoss twins
• Coinbase, a crypto exchange platform
• Ripple, a blockchain payments network
• Tether America, a blockchain payments network
• Charles Cascarilla, co-founder of blockchain payments network Paxos

If you can’t beat ’em, join ’em?

An ironic part of the prediction market-crypto discussion is that the regulated industry would likely pursue both verticals if their licences would not be at risk by doing so. The push by some companies to enter the prediction market space is evidence of that, and those that have not have largely blamed regulatory uncertainty.

Caesars Entertainment CEO Tom Reeg said this week his company won’t put “any licences” at risk to pursue prediction market deals. He also asserted Caesars “is preparing and would be prepared to go down that path” if clarity comes.

Mike Dreitzer, chairman of the Nevada Gaming Control Board, indicated earlier this month he would be open to bringing prediction market technology under state law if able.

There are similar feelings for crypto, which is a popular payment method for younger players. At the ICE Barcelona conference in January, a panel of three international CEOs – Per Widerstrom (Evoke), Gavin Isaacs (Entain) and Fabio Schiavolin (Snaitech) – all lamented that unregulated platforms can utilise crypto while they cannot.

“All three of us would dream to be in the unregulated market just for a day,” Schiavolin joked at the time.

FanDuel founder now leaning into crypto

Those who are venturing into crypto despite the regulatory gruff are seeing the benefits. Nigel Eccles, co-founder and former CEO of FanDuel, has started a new crypto-based iGaming venture called BetHog.

The platform is not licensed or available in the US, but Eccles has embraced crypto as the new frontier, much like he did with daily fantasy sports in the early-to-mid 2010s. DFS is where FanDuel and DraftKings got their start, which at the time was also unregulated. Both have since grown to become the biggest regulated sports betting and iGaming companies in the US.

“We’ve got a very clear signal from the federal government that [crypto] is a technology we should embrace,” Eccles told iGB. “We’ve got really clear operator interest. And so I do feel at a state level, a state regulator level, it is only a matter of time” before the benefits outweigh the risks.

Eccles said security and anti-money laundering risks are the biggest barriers holding crypto back from gaming. But he argued the traceability of crypto makes it more secure than fiat currency, and individualised wallets help protect against fraud and chargebacks.

From a functional standpoint, Eccles contends that operators would save tremendously on money-moving fees, which eat away at margins. This, in turn, could allow for more bonusing to players or other similar benefits.

“Instead of giving 15% of our revenue straight out the door to Visa and MasterCard, we can actually give a chunk of that back to the player and say, ‘Look, you can have a better experience’,” Eccles said.

At stake is whether Estonia – already one of the world’s most digitised economies – can convert its technological advantage and forward-thinking tax policies into a credible and sustainable hub for online gaming. 

“Estonia is indeed moving toward positioning itself as a more attractive and competitive jurisdiction for gambling operators,” says Margus Reiland, partner and head of regulation, gambling and tax at Tallinn-based Law Firm Widen. 

Reiland explains that Estonia’s new gambling bill currently being debated in Parliament represents the most significant update to Estonia’s gambling framework in more than 15 years.  

New measures being considered

Among its key measures are: 

• Updated definitions of remote and additional gambling. 

• Broader scope for licensed operators to offer support services such as IT and accounting within the same group. 

• Mandatory audits of annual financial reports. 

• Clearer anti-money laundering data requirements for licence applications. 

• The Tax and Customs Board becoming the single point of contact for licences. 

• Tighter rules on gambling venues located near youth facilities. 

• Tenfold increases in fines and penalties. 

• Perhaps most importantly, a reduction in the remote gambling tax rate. 

According to the bill’s explanatory memorandum, its aim is to “modernise rules that have remained largely unchanged for over 15 years, strengthen supervision and improve the reliability and transparency of the gambling sector”. 

“In other words,” Reiland adds, “the reforms aim to encourage licensed operators to base their operations in Estonia instead of elsewhere in the world.”  

The timeline for reforms remains uncertain but Reiland says the bill is currently under parliamentary discussion and has not yet been adopted. “That being said, if the government coalition remains stable and continues to support the proposal, it is likely that the amendments will eventually pass,” he adds.  

Estonia new gambling bill’s tax reform 

One of the headline changes is the proposed lowering of Estonia’s gambling tax. For Reiland, this sends a clear strategic signal. The proposed bill by MPs from the Eesti 200 and the Reform Party would gradually reduce the remote gambling tax rate by 0.5 percentage points per year, aiming to reach 4% by around 2029.  

“From a regulatory standpoint, the intent appears to be to strengthen Estonia’s position in the gambling sector,” Reiland says. “And that intent is without a doubt positive.” 

Operators have largely welcomed the move, viewing it as recognition that “their long-standing concerns and challenges are being acknowledged by policymakers,” says Reiland. Although he also points out that the wider political debate “has been more divided”.  

The main question seems to be whether lowering the gambling tax truly benefits the wider economy or primarily favours the operators. 

The most prominent opponents are members of the centre-left opposition party Keskerakond The underlining sentiment is that the proposed gambling regulation is a lobby project, with no real positive effect. Industry insiders, however, are cheering the direction of travel.  

In an October blog post, Tim Heath, founder of crypto-driven gaming giant Yolo Group, praised Estonia’s new gambling bill, noting: “Only a year ago, the plan was to raise taxes. Proposing a different course took serious courage, and it shows the Estonian government understands how our industry really works.” 

Yolo has been headquartered in Estonia for years. Lower tax friction, Heath argued, would attract more operators, which in turn could bring “more investment, more jobs and, ultimately, more tax revenue. By going down this path, Estonia is choosing to grow its share of the pie rather than fight over the crumbs.” 

Digital credibility as a competitive edge 

Reiland believes Estonia’s strengths go beyond gambling taxation. “Obtaining and maintaining a licence in Estonia is already relatively fast, cost-efficient and administratively straightforward,” he explains. 

On top of that, “Estonia has strong IT infrastructure, robust cyber security standards and a well-developed anti-money-laundering framework. This raises the regulatory credibility to a high level.” 

In his view: “Estonia has always been a solid and effective choice for getting a licence – it just hasn’t received the same level of international attention as some other jurisdictions.” That could soon change. Estonia’s X-Road data-exchange system – a secure interoperability platform connecting public and private databases – underpins much of the nation’s digital governance and has become a unique asset for regulators. 

“It’s not just used in gambling supervision,” Reiland notes. “It’s also in data exchange across government agencies, health service providers and many private sector stakeholders. I wouldn’t go as far as to say it is a branding exercise but a widely used system that does actually support regulatory efficiency.” 

Yolo Group’s Heath agrees that this technological backbone gives Estonia an advantage few others can match. The market’s use of crypto as a payment method for gambling is a huge benefit to the group. “Estonia’s embrace of crypto in this new regulation helps cement its reputation as the world’s most digital country,” he wrote. “It encourages operator transparency and turns it into a national advantage.” 

Crypto and compliance in the EU  

Unlike many European jurisdictions tightening their stance on digital assets, Estonia is keeping cryptocurrency as an approved payment method – albeit under strict AML and KYC rules. 

“The Estonian approach allows crypto as a payment method for Estonian licensed operators,” Reiland explains. But he cautions that since MiCA – the European Union’s comprehensive legal framework for crypto-assets, designed to bring consistency, consumer protection and financial stability to the crypto sector – it is still a novel regulation and national practices differ.  

“It should be analysed under other target market jurisdictions whether all necessary requirements have been met,” says Reiland. In practice, he says, “the key question isn’t whether to use crypto but whether the operators know how to apply the highest standards of AML, KYC, enhanced due diligence etc under self-regulation principles”. 

In his blog post Heath echoed this pragmatism, arguing that Estonia’s openness “aligns with MiCA and EU best practice”. The integration of blockchain analytics tools such as Chainalysis, he suggests, allows for “real-time tracing and risk-scoring of crypto transactions,” thus enhancing transparency rather than undermining it. 

Crypto casinos, which are largely unlicensed or illegal across most European markets, are gaining rapid popularity among younger players. Last month Yolo announced it would be leaning entirely into regulated markets, and in another blog post Heath said he believed crypto was becoming “mainstream”.

Predictability and digital expertise 

Some in the industry remain cautious of Estonia’s new gambling bill and point to last year’s short-lived proposal to raise gambling taxes as a sign of political volatility. But Reiland dismisses this concern. 

“Estonia has had a very stable regulatory framework for a long time,” he insists. “The only real changes have come in the past couple of years, largely because different interests were competing over how to modernise the system. Right now if the bill is passed, the expectation is that the framework will remain generally stable for many years and the likelihood of a reversed course is very low in my eyes.” 

That sense of predictability – combined with Estonia’s digital expertise – could be decisive in drawing operators who are increasingly weary of the administrative burdens in older licensing hubs. The draft bill also introduces modest reforms to responsible-gambling measures, including expansion of the Estonia´s self-exclusion register, HAMPI. 

“There were different ideas floating on the self-exclusion list amendments but right now the latest parliamentary bill seems to be quite conservative,” Reiland notes. “It is my view still that probably the HAMPI regulation will be overhauled pretty soon since the existing system has been in place for quite some time.” 

Heath, meanwhile, highlighted this as one of the most important improvements, arguing that the reforms “lay the foundation for a safer, fairer environment – one where players can simply enjoy the thrill of the game, confident that they’re spinning in a trusted, regulated space”. 

Estonia’s new gambling bill a blueprint for Europe? 

If Estonia succeeds, could its model influence EU-wide discussions on digital gambling regulation? Reiland is cautiously optimistic. “Hopefully, if Estonia’s system proves effective, it could serve as a model for EU discussions rather than an outlier,” he says.  

“The underlying logic is not to prohibit or overregulate, but to use IT systems and secure information exchange to support legitimate business while maintaining continuous oversight.” 

Marriage of innovation and integrity could pay off 

For now, Estonia’s new gambling bill’s parliamentary journey continues. “It might be expected that after this bill has been adopted, the Ministry of Finance might also present a bill covering the remaining issues,” Reiland says – mentioning future clarification on crypto and the HAMPI system as likely priorities. “No seismic changes are to be expected.” 

As Heath of Yolo Group put it: “What Estonia is proposing right now could become a blueprint for how small, smart countries lead global industries – by marrying innovation with integrity.” And with legal experts like Reiland pointing to stability, efficiency and credibility as the cornerstones of the new framework, Estonia’s gamble on innovation might just pay off. 

Last Tuesday, Yolo announced plans to incorporate its Sportsbet and Bitcasino brands into the single Yolo.com brand, with the aim of bringing Yolo.com to Tier-1 regulated markets.

This followed a three-year process of research and preparations for the shift. With Yolo at a “crossroads”, as the company described it, founder Tim Heath and co have opted to leave grey markets behind.

However, having thrived as an unregulated crypto casino operator, the move does raise questions over the challenges and potential rewards of transitioning to regulated markets.

Entering regulated markets isn’t just a case of paying a licence fee, explains Juan Ignacio Ibañez, general secretary of the MiCA Crypto Alliance, an initiative aimed at simplifying regulatory compliance across the crypto industry.

“You might think getting a licence is just a fact of spending an amount of money on the law firm and telling them to go get it,” Ibañez tells iGB. “But it turns out that you need to actually adapt your processes a lot, right?

“In order to be able to report a lot of the items that you need to report in the process of getting a licence, you need to change your own internal processes, or set up processes that you didn’t have before. So organisationally, it is quite transformative to get ready to operate in a regulated market. It really changes how you function and your team.”

Why has Yolo made this move into regulated markets?

Yolo in part attributed its decision to pivot to regulated markets to the belief that crypto is becoming “mainstream”.

“It’s therefore our responsibility to bring the crypto casino experience to regulated domestic markets, working within sensible frameworks and combining speed and freedom with safety and oversight,” the company said.

Its previous strategy of operating in unregulated markets proved to be hugely successful, bringing cryptocurrency to the masses.

So why has Yolo made this transition?

Kovach agrees with Yolo’s claim that crypto has gone mainstream, saying the crypto gaming world is at a “pivotal point”.

“The genie is kind of out of the bottle,” Kovach explains. “Having been in the space for seven, eight years, it’s definitely moved beyond a very core niche into something much, much bigger.

“Obviously regulation in the US seems to be moving at a record pace at the moment under [Donald] Trump, but even under Europe with MiCA et cetera, it’s being accepted. Whether we agree with all of the regulations or not, it needs to be regulated. It is being regulated.

“But I think it’s more than that, and they [Yolo] see the opportunity now being within regulated markets. I think it’s going to be fascinating to watch how they go about that.”

Finland, Sweden and Canada seen as opportunities alongside the UAE

In its announcement, Yolo identified Canada, Sweden and Finland as three markets it plans to expand into.

The company also announced it is closing in on securing two B2B vendor licences for the soon-to-be regulated market in the UAE.

iGaming and sports consultant Stefan Kovach believes building credibility compliance in smaller markets before advancing into bigger markets could prove a successful strategy. This belief is based on his previous experiences with Poker Stars and Party Gaming.

“I think even if you’re a big and experienced operator like Yolo, you want to be taking baby steps initially,” Kovach says. “There’s definitely an advantage of getting in early, but there’s also an advantage of being a fast follower and not biting off more than you can chew.

“I don’t know what their exact plans are, but I would imagine the prize is in the bigger markets. And I would also imagine they’re pretty bullish on being able to innovate and disrupt even in markets in which most people are like, ‘you don’t want to enter because it’s done’.”

A double-edged sword

Ibañez agrees starting in smaller regulated jurisdictions could make sense, particularly if these regulators are more readily available to communicate over contentious regulatory issues.

“In smaller jurisdictions, you may have the opportunity to pick up the phone and ring the supervisor and use that relationship to go over any misunderstandings and so on,” Ibañez says. “There’s lots of paperwork, lots of formal errors and things that can go wrong procedurally.”

However, he also feels this could be a negative, adding: “At the same time, a smaller jurisdiction can be a more under-resourced jurisdiction, especially if they are late to the technology.

“So a single team supervising this within the supervisory authority needs to deal with various market niches, which means they will lack expertise here and there. So that can backfire.

“It can be that they’re a bit overworked, they don’t know the technology or the business model that they’re dealing with, and they don’t see this every day. That can also slow down authorisations and so on. It can go both ways.”

This could be a costly endeavour for Yolo too, especially with its plans to operate in a number of regulated markets.

“It’s not just cookie cutter, we do one regulated market and then we just take that and we replicate it in another,” Kovach continues. “There are different financial obligations.

“There’s different, albeit I think, increasingly similar, player responsibility, safety, KYC et cetera requirements. So yeah, there definitely are higher costs.

“I’m sure Tim and the Yolo group, they’ve been looking at this for three years, they will have done their homework and they’re a premium operation. Their customer service, their security checks et cetera are pretty close to being what Tier 1 requires anyway, I would imagine.”

Will regulators welcome Yolo with open arms?

Yolo itself acknowledged in its announcement that domestic regulators offering licences “are not keen” on continued operations in other pre-regulated markets.

Even its status as a crypto operator could cause concern among Tier-1 regulators, says Elizabeth Dunn, partner at UK law firm Bird & Bird.

Dunn notes the UK Gambling Commission has previously refused licences to companies due to not feeling comfortable with those business’ crypto-funded origins.

“Regulators in most Tier-1 markets continue to struggle with the idea of operators directly accepting cryptocurrencies and/or being funded through cryptocurrencies,” Dunn says.

“Yolo’s history as a crypto-first operator is, therefore, likely to come under scrutiny when regulators are assessing its suitability to hold a licence.”

However, Dunn also believes some regulators may view the licensed entry of a gambling giant such as Yolo in a positive light.

“Some regulators may see an operator like Yolo seeking a licence as an opportunity to bring previously unregulated activity within the scope of its regulatory powers and tax regime, therefore ensuring its residents are able to access Yolo’s services on a regulated, tax-paying basis,” Dunn explains.

A forward-looking investment for Yolo

In Ibañez’s view, this is very much a move with the future in mind for Yolo.

This is especially true for whether Yolo seeks additional outside investment.

“It’s a forward-looking move, is something I would speculate,” Ibañez says. “It really depends on the circumstances of what Yolo is looking for, right?

“If you are trying to get, for instance, some more enterprise customers or partners, some of these partners, they just might not want to work with unregulated partners or providers. So, it opens a different kind of game.

“And I guess it sort of makes sense. You start, you prove your business case in the unregulated market, you build sufficient capital, you build sufficient strength and brand recognition and then you’re ready to make the next step, which is sort of difficult to do the other way around.”

Significant impact expected on Yolo’s margins

In terms of margins, Kovach suggests this move could affect Yolo “quite significantly”, although, like Ibañez, he views this as a long-term play.

“You’re subject to the tax regime of that licence, so it will without question on any of the Tier-1 licences be significantly higher than if you’re operating on a Tier-2 or Tier-3 licence,” Kovach explains. “That’s an inevitability.

“But I also think as the world becomes more and more regulated, as the world adopts cryptocurrency and more than that the kind of culture that has permeated around crypto casinos, that is increasingly engaging. There’s just a massive opportunity there.

“The biggest opportunity actually is a generation that gambling companies are failing to engage with who do use crypto, who do expect a different experience and are increasingly in regulated markets. So you might well take a smaller margin, but actually, you have a bigger audience there and a more sustainable path to growth and value creation, if ultimately you want to spin this up on the stock market or sell the business.”

Where could Yolo excel?

Yolo prides itself on innovation and its role as a true pioneer in the crypto gambling sector.

The company says its next chapter will connect “land-based excellence with digital innovation”, with the hopes of providing seamless wallet experiences for players across physical and online betting.

It is that mindset that Kovach believes will stand Yolo in good stead as it transitions into this new era.

“I do think it’s a culture,” Kovach declares. “I do think it’s about understanding the audience and understanding that this crypto audience, which is becoming mass market, particularly among the younger generation, is demanding more.

“It’s demanding more from a user-experience point of view. It’s demanding more from transparency point of view, ease of payment point of view, community, game evolution, et cetera. I think it will be a big advantage for them.”

As crypto continues to evolve from niche to mainstream, Ibañez expects Yolo to be at the forefront of the movement due to its “native” origins to the sector.

“What we are seeing is that the way in which these more traditional Web2 companies are adopting this technology is a bit arm’s length,” Ibañez says. “If you’re native with a technology, you are using it to its fullest extent, right?

“And you are really just adopting partially something that is unfamiliar to you, because you want to ride a trend.

“Native acquaintance with the technology, and just the ability to operate with the technology at all levels of an organisation, allows you to use the full potential. That’s probably a competitive advantage.”

Could regulation harm innovation?

Dunn suggests the company’s entrance into regulated markets can be conducted in two ways.

“There are two options for Yolo here – enter markets organically or seek to acquire already licensed entities, which it may then rebrand with the Yolo offering,” Dunn says.

“We have seen at least one other crypto-first operator enter a regulated market through acquisition, and this can (rightly or wrongly) be seen as an ‘easier’ way of obtaining a licence.”

Kovach describes Yolo’s operation as “very shrewd and very sound”, although he also suggests the company’s move into regulated markets could steer it away from what has made it such a success.

“I think they will be able to deliver against what’s required,” Kovach adds. “But I guess the risk is it takes up more resource and more effort than they’ve certainly been used to. Does that then quash their ability to be as consumer-centric and innovative as they have been?”

Although he acknowledges the risks, Kovach believes Yolo is all-in on the move, in line with the company’s, and especially Tim Heath’s, core principles.

“What they’re doing, he’s not paying lip service to this,” Kovach concludes. “They’re obviously going for it.

“I know Tim, he’s a gambler. He likes to place big bets and I think he’s placing a big bet on it becoming more and more mainstream.”

In an announcement on Tuesday, Yolo Group said it plans to bring its single Yolo.com brand to Tier-1 regulated markets.

“It’s our responsibility to bring the crypto casino experience to regulated domestic markets, working within sensible frameworks and combining speed and freedom with safety and oversight,” the group said in a statement on its Substack.

“It has become abundantly clear that domestic regulators who are offering licences are not keen on other group operations continuing to operate in pre-regulated markets. In other words, you cannot be white and grey; you have to pick a side. This means a crossroads has been reached and a decision must be made. Do we go left or do we go right?

“That’s why we’ve decided it’s time for our next chapter: to bring the best of what we’ve built into Tier-1 regulated markets.”

The company said it is in the final stages of securing a pair of B2B vendor licences for the soon-to-be regulated market in the UAE.

As part of its move Yolo Group will use its skills and experience from the crypto casino experience to enter regulated domestic markets, following a three-year process of research and preparations.

“The direction is clear: the regulated landscape is the future of gaming and we’re ready to lead with the same fearless innovation that got us here,” the group added.

Yolo Group at a ‘crossroads’

The announcement marks a distinct shift in strategy for Yolo, as it found itself at a “crossroads” prior to its decision to move into the regulated space.

Yolo said it believed licensed regulated markets are the sector’s future and will enable the company to connect its land-based and digital businesses through seamless wallet experiences via the Yolo.com brand.

“This isn’t about walking away from the past,” the Yolo statement continued.

“It’s about taking everything we’ve learned, everything we’ve pioneered, and applying it in environments where operators, regulators and players can work together, creating a stronger and more sustainable ecosystem for everyone.”

Alongside its plans in the UAE, Yolo is also aiming to expand into markets such as Canada, Sweden and Finland.

Changes to senior team

Yolo Group has made a number of changes to its senior team of late, with Lara Falzon brought in as CEO of its B2B brands.

Falzon’s role encompasses overseeing brands such as the Hub88 aggregation platform, Live88, Odds88 and OneTouch.

Stephanie Eddy also joined after over a decade with Betway, taking over at chief revenue officer of the B2C arm Yolo Entertainment.

Chinese Triads have long used casinos and casino junkets to launder money from drug trafficking and other crimes, the report states. During Covid-19 lockdowns, when land-based casinos shifted online, the criminals moved too.

Since then, they have built a worldwide financial ecosystem that lets bad actors move money freely through casino accounts, betting credits and cryptocurrency transfers. Known in Mandarin as “fei qian” (“flying money”), these networks fly under the radar, sidestepping traditional routes “in ways that frustrate law enforcement oversight”. The transactions circumvent international bank wires that could trigger AML alarms.

Shadow bankers under the radar, but not invisible

According to a July study from the Foreign Affairs Forum, the illicit brokers “have significantly outpaced traditional money laundering groups, primarily by offering exceptionally rapid transfer services, charging minimal commissions – typically less than 2% of the principal amount”. Their sophisticated methods render cash “virtually untraceable as it crosses international borders”.

Their proliferation could “exacerbate widespread problems such as drug epidemics, tax evasion and organised crime over the coming years”, the FAF warned.

However, law enforcement agencies are aware of the underground financiers and are working to fight them on their own turf: in cyberspace. As stated in the TRM report: “The same features that make cryptocurrency attractive to criminals (speed, global reach, pseudonymity) can be leveraged by investigators to track and freeze illicit assets in ways not possible before.”

The report states that with “diligent blockchain analysis, interagency collaboration and bold strategies – including going on the offensive in cyberspace – authorities can illuminate these shadowy networks” and eliminate some of them.

For the full report, click here.

“We are actively implementing and seeking new opportunities in the crypto space,” chief executive Neal Menashe told analysts during Super Group’s Q2 earnings call on Thursday.

“These initiatives aim to position us for long-term success as alternative payment methods and digital asset frameworks become more integrated into the regulated gaming ecosystem.”

The Betway operator described Africa as vital to its strategy. In Q2, Africa and the Middle East generated almost 40% of the NYSE-listed group’s total revenue, with the market rising 38.8% year-on-year to $229 million.

Menashe stressed the importance of technology investment across the region to support its rapid growth. As part of this effort, Menashe said the operator was looking to introduce crypto payments in more African markets, to offset high banking costs.

How is crypto boosting Super Group’s performance in Africa?

African businesses often face higher processing fees than other regions. Settlement delays also add hidden costs.

“In the African side of our business, we have a banking issue there,” Menashe said. “I think crypto and coins can make a huge difference there because, remember, banking is a really big cost in Africa, especially for us onboarding our customers and then payments across the continent. So, for us, I think crypto then also brings a different customer.”

He noted regulation across the nation supported these crypto ambitions. Menashe also added that crypto expansion could attract new customers.

“It’s a different kind of customer, again, a different genre, in the same way that in the casinos, we have different genres of casino. Crypto is a different kind of customer. So that helps us, and that’s what we are actively looking at,” he told analysts.

“That’s our great long-term play, and I think aligns with our strategy and especially on the processing side, if we can do something clever there. We’ve got some ideas on that effectively that will bring pure profit to the bottom line.”

Super Group said its technology focus, crypto expansion and Jackpot City rollout will support long-term success in Africa.

It expects alternative payment methods and digital assets to integrate further into regulated gaming ecosystems.

While expanding in Africa, Super Group recently announced it will be exiting the US due to revenue costs. North America, including Canada, posted a record quarter with $199 million in Q2 revenue. The US exit has no public date but is expected to cost a one-off amount of $30–$40 million.

Menashe said during the call that the group was looking for a buyer for its US player database.

Super Group raised guidance following strong Q2

Super Group’s revenue increased by 30% year-on-year to $579.4 million during Q2. 

It said in an earnings update on Thursday that growth was powered by increased activity in Africa, Europe and North America markets and had lead to record quarterly revenue for Super Group.

However, the figures were partially offset by declines across the LatAm, Middle East and Asia-Pacific markets.

Monthly active customers for Super Group increased by 21% to 5.5 million, compared to 4.5 million in Q2 2024, marking the fifth consecutive quarter of monthly active customer growth.

Profit before tax, meanwhile, amounted to $38.8 million.

A reality check for Brazil gambling licensees

Robin Harrison tries (and fails) to stem the tide amid Ed’s diatribes in this episode. But this reality check, for Brazilian gaming licensees in particular, is important.

By constantly talking up how prevalent illegal gambling in Brazil is, the industry may be setting itself up for higher taxes, further restrictions on marketing and product. That could ultimately turn the Brazilian illegal market conversation into a self-fulfilling prophecy. 

Right to the Source is on Apple Podcasts!

Crypto casinos overcooked?

It’s similar with the crypto market, with Ed particularly incensed by a widely reported figure that he says is simply unmoored from reality. Want to find out H2’s estimate for the true size of the market? It’s all here for you. 

And we promised you Albania, and we deliver with some cold, hard figures. You’ll hear how the Albanian casino market is performing after a 2018 ban on gambling was rescinded in 2024. Just in case you thought Right to the Source had grown up, there’s also some talk about The X-Files and Uno. 

In a deal announced today, Polymarket said it will serve as the social media platform’s official prediction market partner.  

“We are pleased to partner with Polymarket and look forward to bringing their our data and technology to Polymarket users through a range of creative product integrations,” X CEO Linda Yaccarino said.

Polymarket and X plan to launch an integrated product that provides “data-driven” insights to the cryptocurrency-focused prediction betting platform. Polymarket predictions will utilise the social media platform’s data to create live insights and incorporate real-time annotations on prediction market offerings.

“Combining Polymarket’s accurate, unbiased and real-time prediction market probabilities with Grok’s analysis and X’s real-time insights will enable us to provide contextualised, data-driven insights to millions of Polymarket users around the world instantaneously,” Polymarket CEO Shayne Coplan said.

Polymarket not legal in the US

The platform is not technically legal in the US and is not registered with the Commodity Futures Trading Commission. Based in New York, Polymarket settled with the CFTC in January 2022 and agreed to block US users from accessing the site.

Instead, the exchange has pivoted its focus internationally and with great success. Over the course of the November US elections, Polymarket took in billions of dollars in trading volume, including one high-profile trade in which an unknown “whale” bettor from France won $85 million on Trump’s victory. As with other prediction markets, Polymarket has since begun to offer sports contracts as well.

Unlike other, CFTC-registered exchanges, Polymarket primarily utilises cryptocurrency for trades, which detractors say invites a host of KYC and AML concerns. The range of contracts on the site has also been heavily criticised. Grim examples include bets on certain elements of the California wildfires in January and the timing of the death of Pope Francis in the spring.

Trump and Musk fallout

The prediction market Kalshi had announced that it was partnering with Elon Musk’s artificial-intelligence firm xAI on 20 May. However, that announcement was then rolled back that same day with no other details.

The news of the latest X prediction market partnership comes just days after Elon Musk and US President Donald Trump engaged in a public dispute on social media over a Republican Party spending bill that recently passed through the House.

The Trump family, in particular Donald Trump Jr, has previously backed Kalshi. Trump Jr was appointed as a strategic advisor to Kalshi in January.

He wrote on X 13 January: “On Election night at Mar-a-Lago, while biased outlets called the race a coin toss, my family and close friends used the prediction market @Kalshi to know we won hours ahead of the fake news media.

“I immediately knew I had to contribute to their mission. Today, I am proud to announce that I am joining Kalshi as a strategic advisor.”

The public spat between President Trump and Elon Musk grew to increased heights yesterday, with both calling each other out on their own personal social media platforms Truth Social and X.

Musk stated that Trump only won the presidency because of his financial backing, while Trump threatened to cut all government subsidies and contracts that flow to companies owned by Musk.

Musk continued the spat by insinuating on X that Trump had a deeper connection with Jeffrey Epstein by posting, “Time to drop the really big bomb: @realDonaldTrump is in the Epstein files. That is the real reason they have not been made public.”

Time to drop the really big bomb:@realDonaldTrump is in the Epstein files. That is the real reason they have not been made public.

Have a nice day, DJT!

— Elon Musk (@elonmusk) June 5, 2025

The report found up to five million clicks across social media each month were directed to black market sites via affiliate links posted by streamers and influencers.

These influencers are also giving advice on how to approach black market sites by using VPNs and avoiding tracking.

The report found 90% of responding content creators said they used the online crypto betting platform BC Game, a platform no longer licensed in the UK via a white label agreement. It exited Curaçao in December when a local court declared it bankrupt after failing to pay players funds they were owed.

One creator surveyed in the report, who actively promoted the site in their stream, was found to be telling viewers: “As always guys, if you want to play on BC Game and support me as a gambling content creator, and if you want your quick spins, your auto plays, your bonus buys, no ID checks, no verification and full player protection, then make sure you sign up via gamblersden.com, or use the link down below.”

High numbers of underage users on the black market

A significant number of underage users may also be caught up in illegal online gambling, the report suggested.

Deal Me Out has estimated that as many as 420,000 underage school children may be using black market gambling sites, with a particular inclination towards loot boxes and in-game currencies in video games. The report noted that younger gamblers were also more likely to favour crypto gambling sites, which are not legal in the UK.

One young person interviewed said they had started gambling at 14 years old.

“It was social for me. My friends and I would come home from school, jump on Discord and watch each other gamble. We’d also be gambling with our gaming friends from the US, South America and Asia. There is something quite appealing, sitting next to your friends on a virtual table,” said an interviewee identified as MT.

The proliferation of underage gambling has been widely reported. An Irish report by the Institute of Public Health in 2023 found that roughly one in four 16-year-olds had gambled for money. Of those surveyed who gambled, 10% reported that they had done so excessively.

Frustrations with Gambling Commission regulations

The UK’s gambling industry is undergoing a regulatory reform, following the review of the Gambling Act and subsequent white paper in April 2023.

Reforms include mandatory deposit limits for first-time depositors and spin stake limits on slots of £5 for those 25 and older and £2 for adults aged between 18 and 24.

Deal Me Out reported that consumers have expressed concerns about giving more personal information to operators, as well as frustration with the loss of content such as bonuses and turbo spins.

As a result, some gamblers are choosing to use global black market sites to avoid friction and regulation.

The organisation has warned that using “disruptive methods alone against black market operators does not effectively address the problem”.

It noted that cease-and-desist letters to criminals and offshore payment providers can create games of “whack-a-mole” as mirror sites often appear whenever a site is blocked or called to be taken down.

Public awareness of what sites and verticals are illegal is lacking, as the report found that “people that gamble and those that don’t are equally unable to tell what is regulated and what is not”.

Influencers and content creators need black market games

Online content creators and influencers have admitted they are increasingly moving to play on illegal products.

“Regulation has forced our hand; if we don’t use crypto casinos we just can’t compete,” a YouTube content creator said within the report.

“Our viewers want to watch bonus buys, turbo spins, high rolling content, something we just can’t do in the UK anymore. I understand why the Gambling Commission has put these rules in place, we should do everything we can do protect people from addiction, but creating a poor consumer experience will only lead to the black market [increasing].”

A TikTok creator added: “Just look at content creators in Germany, France, Belgium – they’re all using crypto casinos. Americans, Canadians, Australians too. Show me a streamer that’s using UK regulated websites to create content and I’ll show you a fool.”

Deal Me Out calls for action against black market

Deal Me Out has recommended that the government and regulator take action on a number of risks to the public.

It has called for an “urgent review” of crypto gambling to prevent global blockchain operators from connecting with UK citizens, in particular underage gamers.

A preventative information campaign should also be undertaken to educate the public about the black market, fake games, payment refusals and the criminal activity associated with both.

Deal Me Out said it was “increasingly concerned” that people with gambling addictions will be “disproportionately” thrust towards the black market by further regulations.

The charity said it is not arguing against slot limits and affordability checks but is urging policy makers to consider the impact of regulation.

According to a similar report published by the Betting and Gaming Council (BGC), gamblers in the UK stake roughly £2.7 billion ($3.4 billion/3.1 billion) with black market operators annually.

Of those who played on both legal and illegal platforms, the BGC found that 12% of the money was spent with illegal operators, totalling £2bn a year. Those that exclusively used illegal sites spent £695m annually.

The regulator hit two operators with penalties for anti-money laundering (AML) and customer care failures last month. The Football Pools was ordered to pay £375,000 (€449,732/$484,417) for AML breaches, while Corbett Bookmakers was hit with a fine of £686,070 for numerous AML failures.

In an update (8 April) to its AML and terrorist financing risks guidance, the UK watchdog said it is aware that some remote and non-remote casinos are providing unlicensed money service business (MSB) facilities, such as foreign currency exchange, third-party cheque cashing and the transfer of money in and out of casinos via a third party.

It said it is also aware that customers have made attempts to deposit large denominations of foreign currencies. This includes €500 bills.

“The sale of high-value notes, in any currency, entails a significant money laundering risk and any request to buy or sell €500 notes or quantities of other high-denomination notes should be treated as high risk,” the Commission stated.

Instances of people being offered money for their personal details in order for criminals to open multiple accounts with gambling operators have also been discovered.

The Commission said it is “concerned” about the risk of illicit mule accounts that are being opened via paid-for personal details and that those gaining access may be acting as unlicensed betting intermediaries.

AI and crypto money laundering risks

Artificial intelligence programmes and software have grown in sophistication, according to the Commission and are now being used to bypass due diligence checks.

Criminals are using AI to create false documentation, deepfake videos and face swap images and videos to facilitate the laundering of money.

The Commission has stated that all operators need to train staff in the assessment of customer documentation for AI-generated documents.

When crypto assets or crypto currencies are being used, licensed gambling companies are expected to treat those exchanges as high risks for money laundering.

The watchdog has asked operators to be “mindful” of reported crypto currency thefts, which could then be laundered through gambling platforms.

It has also said that its attention has been drawn to crash games that have been offered in illegal crypto casinos, as well as increased interest from licensed operators due to their popularity.

“There are concerns that products of this nature can allow criminals to camouflage the high-risk behaviour of cashing out quickly with limited gameplay within the context of the crash game and that transactional monitoring controls may not be effective in detecting suspicious activity,” the Commission stated.

Operators have been advised to install appropriate procedures that can identify suspicious wagering patterns in crash games.

Gambling Commission warning on black market suppliers

The UK watchdog has said it is aware that games developed by operators who hold software licences are ending up on unlicensed websites operating in the UK.

It has once again advised licence holders to ensure their supplier partners are not connected to illegal sites. If found to have occurred, operators are required to “terminate” those relationships immediately.

“It is crucial that licensees also engage proactively with the Commission when such activity is detected, providing details of the preventative measures taken to ensure the activity ceases without delay,” the Commission outlined.

The regulator has mentioned this in various public speeches over the last few months. In a January webinar, Commission CEO Andrew Rhodes warned operators they could suffer if supplier partners are found to be active in the black market.

“I don’t understand why anyone in the licensed industry would want to be in business with a company that would be supporting illegal competition,” he said at the time.

The Commission has warned that casino operators “must conduct” appropriate money laundering and terrorist financing risk assessments. Operators must also implement controls to stop money laundering, which should be reviewed regularly.

Any customers that are using MSB functions should be seen as high risk. As a result, they should be subject to enhanced customer due diligence countermeasures.

Land-based operators have also been advised to run closed-loop payment process, as the watchdog noted that it had found some operators using open-loop payment process.

These open-loop payment systems are a known money laundering risk, as they allow criminals to move money across multiple payment methods.

In the first half of 2024, the country’s regulator, l’Autorité Nationale des Jeux (ANJ), reported that the overall turnover in the French gambling sector increased by 3.8% to reach €5.5 billion ($5.25 billion/£4.13 billion) year-on-year. Online sports betting grew its gross gaming revenue (GGR) by 16% to €871 million.

The overall online gambling market was up 11% in the same period to €1.3 billion in GGR, including online poker, which saw gross sales increase slightly by 2% to €257 million. The total player base for online poker was up by 10% year-on-year, reaching 1.2 million players.

Speaking to iGB, ANJ president Isabelle Falque-Pierrotin said she believes the market is “quite active”.

“It’s almost a market that has a sort of contra-cycle dimension. You know, once the general economy is declining, the markets, the gambling market, it’s still growing,” she adds.

She says La Française des Jeux, or FDJ United as it recently rebranded to, represents almost half of the market’s GGR.

Through its acquisitions of ZEturf in 2022 and Kindred in 2024, the operator expanded outside of its lottery monopoly role to compete with commercial operators in the online market.

“It gives momentum to the French market that is quite important and it generates reactions from the others,” Falque-Pierrotin notes.

She says FDJ’s “dynamism” is creating a competitive battle for consumers. However, one key component is missing in the market, as France is just one of very few EU countries that has not legalised igaming.

Continued political uncertainty raises questions on igaming’s future

Moves to bring igaming forward faltered in October last year due to political instability. The previous French government led by Michel Barnier had begun the initial drafting of what could have potentially become igaming legislation. This was hindered by strong pushback from the land-based casino sector, particularly Casinos de France.

The government instead sought to hold consultations with the sector on whether legalising igaming would benefit the market.

Barnier’s government ultimately fell to a vote of no confidence, bringing an end to all legislation it was working on. While President Emmanuel Macron named Francois Bayrou as prime minister on 13 December, that government’s longevity is unclear.

Annabelle Richard, legal partner at Pinsent Masons, tells iGB that France’s continued political uncertainty has dampened the sector’s hopes for legal igaming.

“The problem is that we don’t know how long this government is going to be able to stand and therefore what the chances are that any draft regulation would go to the end of the process, which sometimes in France can be pretty lengthy.”

Igaming hurdles

There is a view from stakeholders in France that the legalisation of igaming has never been closer and will likely happen. However, no one is confident of a time frame. Due to the political instability, it could be this summer or early 2026, sources suggest.

The ANJ’s view is that any igaming legislation should have strict regulations in place before it is passed. “The regulator is not in charge of deciding whether [igaming] has to be open or not. But what we said is, if [the opportunity] is to be reopened, it should be reopened under very strict conditions, conditions relating to the marketing of such offers, conditions related to the [operators],” Falque-Pierrotin says.

Pinsent Masons’ Richard notes that land-based casino operators have successfully lobbied in the past few years against the opening of the online casino market. They have pointed to risks to local businesses and employment, warning that online legalisation could result in a third of French casinos closing.

“They also indicated that this reform [could] threaten 15,000 jobs in the first year and a 25% drop in the activity of the remaining casinos,” Richard says

“However, it seems that their position becomes harder to defend and we have seen in recent months multiple draft regulation on the legalisation of online casinos. The very significant size of the black market and the need for additional tax revenues could lead the French government to allow igaming in the coming months.”

Pressures of France’s illegal market

Like many of its European peers, France is navigating a thriving illegal online gambling market.

A reported published by PwC in November 2023 identified 510 websites that were offering illegal gambling to French consumers. Of the sites found by the study, 65% offered online casino games.

“French consumers of illegal online gambling mainly access this offer through direct internet searches, thus demonstrating a good knowledge of the key illegal gambling sites existing on the French market,” the PwC study stated.

At the time, the PwC report commissioned by the ANJ estimated that the illegal market had a GGR of between €748m and €1.5bn.

However, its size has sparked debates between operators and the regulator, with the former calling for more action.

ANJ has increased enforcement against black market

The ANJ says that in the last few years its ability to tackle the illegal market has grown, thanks to the introduction of new tools. These include the ability to quickly block IP addresses.

“Within two years, we have been rather successful, I would say, because we’ve blocked almost as many websites’ addresses as we did when we had to ask the judge [to block illegal sites]. Before it was a judiciary proceeding and it was effective but very long – now it’s much quicker,” Falque-Pierrotin says.

The regulator notes that illegal operators can mirror their websites and pop up with a slightly different address. However, Falque-Pierrotin believes that its increased actions are signalling to the illegal operators that it is ready to fight them.

“We also developed quite an effective relationship with the technical intermediaries, the search engines, the social networks. We have specific hotlines to report to them illegal content,” she adds.

While the regulator estimates that the illegal market accounts to roughly 10% of the French market, operators have pushed back, arguing that it is much more and that more robust action needs to be taken.

Last year, French gaming trade body l’Association Française des Jeux En Ligne warned the illegal gambling problem had reached a tipping point, with illegal players totalling four million in 2023, ahead of the regulated sector’s 3.6 million.

Illegal igaming market cannibalising land-based casinos

The industry believes the market could be doing more in terms of enforcement. Laurent Lassiaz, JOA casinos CEO and VP for land-based trade body Casinos de France, tells iGB: “I would love to have a government which is much more pushy when it comes to fighting illegal gaming, when that’s the number one issue in any country in Europe right now.”

The JOA chief claims the operator is already seeing igaming cannibalisation from the illegal market, considering the illegal market is quite sizeable.

“There is already a very, very big illegal market and, as those websites are quite easy to reach, I do strongly believe that we’ve already been facing a cannibalisation impact,” Lassiaz says. “Because we know that our customers are already playing on some illegal websites and, for a large majority of them, they don’t even know that it’s illegal.”

Illegal sites

Richard notes that when she is asked by clients to investigate illegal websites on their behalf, she has found these sites can request more data than official sites and their KYC requirements are much less robust than a licensed operator’s would be.

“Of course, it’s fairly easy to deposit money, but when you want to withdraw money it’s just impossible. I mean, you have all kind of official identity verification tools, you know,” says Richard.

“But weirdly enough, these tools never work and in the meantime you scan your ID card, you make videos of yourself, and you send all this to websites which are located you don’t know where and operated by you don’t know who,” Richard says.  

“It raises a number of issues for people with a problem of addiction even if they win. Even if they want to stop, they will never be able to withdraw their balance, which is one more reason to keep coming back to the website.”

Sorare Law

It should be noted that France has made one move towards online gambling in the last few years, or rather a diversification of the previous betting-only model. In 2023, it passed the ‘Digital Space Regulation Law’, often called the Sorare Law or JONUM framework.

This law was brought into place to accommodate the popular fantasy sport cryptocurrency-based trading cards operator Sorare. Its games allow players to win NFT-based items, which potentially could be traded for cash.

Sorare works by issuing virtual player cards as NFTs, which can be bought on the Ethereum platform and used to create a fantasy team.

The card’s value can increase or drop depending on players’ performances in a real football match. These cards can be traded on Sorare’s digital marketplace/exchange.

Since a player’s real-life performance has an impact on the value of the cards won, Sorare’s operation caught the attention of the ANJ.

Getting creative with “free-to-play” casinos

As such, ANJ required Sorare to provide consumers with enhanced access to its existing free-play model and give them equal winning opportunities, regardless of whether they pay to play or not. Sorare’s amended model allows French players to enter its tournaments without having to purchase NFTs/blockchain cards.

The operator is hugely successful worldwide and its free-to-play service has for some time enabled it to circumvent gambling regulations in the UK. However, last year the UK’s Gambling Commission initiated legal proceedings against the company for providing unlicensed gambling operations in the UK.

Richard notes that this law in France has raised questions around the future of online gambling and models that can get around the prohibition of online casino games.

“A number of operators are considering deploying slots-like mechanisms [into online games], with the proper skins to make them fit into the regulation,” Richard tells iGB.

“You cannot win cash, but [rather] tokens which would then be redeemable. One of the main constraints was that the operator who allowed you to win the digital objects could not be the same one who allowed you to redeem your token against cash. But as you can imagine, there are already big platforms where you can exchange these digital tokens and redeem them for cash.”

Increased tax contributions putting operators under pressure

Alongside the potential for legal igaming in the market, French operators are preparing to pay higher tax bills across all other online verticals this year. These public levies were included in the Social Security Financing Act for 2025 and relate to increased social security contributions, applicable as of 1 July 2025.

France’s gambling tax rates are based on GGR and differ between verticals. Operators then pay a separate social security contribution, which is due to increase across all verticals.

As part of the social security payments, online sports betting contributions are being increased from 10.6% to 15%, while on-premises sports betting contributions are moving from 6.6% to 7.6%.

Richard notes says that there is also a new annual contribution on advertising investments which is due in respect of financial years ending on or after 1 July 2025. This will amount to a 15% contribution on gambling advertising expenditures, including publication costs and the purchase of advertising space.

“The new article L137-27 of the Social Security Code has been modified during the parliamentary process. The tax percentage is set up at 15% and the financial bonuses granted to players are not considered as advertising expenditures and are therefore outside the tax base,” Richard says.

FDJ and Banijay bemoan tax increases

Speaking to investors during its full year earnings call on 6 March, FDJ CFO Pascal Chaffard said the impact of the new taxation resulted in it paying €45 million in tax revenue in 2024.

This increase in contributions will impact its overall group revenue in 2025, which is targeted at €3.8 billion with a recurring EBITDA margin of over 24%. FDJ also noted that increasing tax rates in France could lead to a €100 million tax payout in 2027.

Betclic Everest Group owner Banijay Group CEO François Riahi told analysts in its full-year results the tax increase in France is “anti-competitive”. It plans to contest them with the authorities. In its results published on 6 March, the group estimated it would face a €20m impact from the taxes in its 2025 results.

“In the French market we do pay a high level of tax,” Lassiaz tells iGB.

“One part is going to the [national] government, but also a significant part is going to local level, the municipality level and the regional level and, all of a sudden, you know, people at the top level of the government realised that thanks to the casino industry, they were able to finance lots of things locally.”

These tax increases could ultimately push players into the black market if operators drive up prices to absorb the increase. For now, it remains unclear whether the new French government has an appetite to revisit igaming legislation in the country.

However, given budget concerns, the potential new tax base the sector could represent may see stakeholders fight for it to be put back on the table this year.

Up first this week, a new survey has highlighted the potential for sports betting subscription services.

Published by YouGov, the report found that a significant number of bettors would consider paying for a subscription. Of those surveyed, 22% said they would be “very likely” to join some form of subscription service.

A further 43% said that would be “somewhat likely” to subscribe, with 44% of those within this category aged 18-34. In comparison, only 18% of bettors were “not at all likely” to sign up, with 10% “not very likely”.

As for why consumers may be interested, 46% said this was due to the opportunity to access exclusive promotions and offers. Lower fees or reduced commissions also scored highly at 45%, new betting markets at 38% and personalised offers at 35%.

In terms of cost, 25% of bettors said they would pay up to $10 a month for such a service, 17% would allow $10 to $19 monthly and 12% would pay $20 or more.

Choctaws sign casino cryptocurrency partnership in Oklahoma

Next, Choctaw Casinos & Resorts has agreed to a partnership with Bitline, a provider for casino chip access directly from cryptocurrency.

The deal, supported by Everi, introduces cryptocurrency and digital assets as a new source of liquidity for casino customers in Oklahoma. Choctaw said this is the first partnership of its kind in the US.

Bitline will leverage Everi’s Cash Club payment infrastructure to make the service available to Oklahoma players for betting. Cash Club will also board, screen and verify patrons looking to use their digital assets to gamble.

“Through our long-term relationship with Everi, a leader in fintech solutions, we will continue to invest in innovative offerings that provide the discerning gaming VIP access to funds in a safe and secure manner,” said Thomas McDonald, senior director of cage and credit at Choctaw.

Inspired agrees to virtual sports deal with Altenar

On the subject of digital gaming, Inspired Entertainment has announced a partnership with sports betting software provider Altenar.

This collaboration will integrate Inspired’s virtual sports betting products into Altenar’s sportsbook platform. Customers will have access to a range of virtual sports betting options.

Altenar has sportsbook customers in more than 30 countries around the world. It recently expanded its client base by launching in both Peru and Brazil.

“This partnership showcases the versatility of the Altenar platform,” Altenar director of operations Antonis Karakousis said. “We are thrilled to launch Inspired’s virtual sports products with our partners. This enhances our sportsbook offering with the very best in virtual sports technology.”

Swintt names Dalla-Giacoma as new CCO

Elsewhere, another content provider, Swintt, has appointed Anthony Dalla-Giacoma as chief commercial officer.

Formerly of Quickspin and NetEnt, Dalla-Giacoma joins the leadership team at Swintt. The provider confirmed the new addition today (10 March).

He will oversee the sales, account management and marketing teams. The role also includes devising and deploying commercial strategies, strengthening partnerships, identifying new business opportunities and optimising revenue growth.

Dalla-Giacoma was most recently CCO at Quickspin. Prior to that, he worked as an account manager and regional business manager at NetEnt. In total, he has spent 15 years in the igaming industry.

“Joining the team as CCO is a truly exciting opportunity,” Dalla-Giacoma said. “I look forward to using my experience to help drive the business to new heights.”

Gaming Corps targets North America igaming growth with Oddsworks

Finally this week, Gaming Corps has entered into a strategic partnership with Oddsworks to support its expansion plans in North America.

Under the deal, Gaming Corps content will be distributed through the BetGuard platform across North America. This includes key US markets such as New Jersey, Pennsylvania and Michigan.

The agreement covers Gaming Corps’ six game engines: casino slots, table games, multiplier games, mine games, plinko games and Smash4Cash.

“Everyone in igaming knows the potential of the North American market,” Gaming Corps CEO Juha Kauppinen said. “It will be very exciting to work closely with market leaders like Larry and Steven DeMar from Oddsworks.”

The CasinoSky site offers games of chance but holds no licence in the Netherlands. It had already been hit with a fine of €280,000 in March 2024 when KSA investigators found that players with IP addresses in the Netherlands could still access the site.

Furthermore, when investigating the website, it was found that players could still make deposits with credit cards linked to Dutch banks and that the area code when registering was automatically filled with the Dutch +31.

The Netherlands had also not been marked as an excluded country in the website’s terms of service.

KSA chairperson Michel Groothuizen said in a released statement that the Netherlands has a legal market where this type of gambling should take place in a safe manner.

“With these types of illegal providers, we often see that no account is taken of the prevention of risky gaming behaviour,” Groothuizen said.

“For example, there was no age verification, which also allows minors to play, and the possibility was offered to gamble with cryptocurrency. At KSA, we take tough action against these types of parties.”

The Costa Rica-headquartered Sarah Eternal SRL has six weeks from the issuing of the fine to pay the €900,000 or appeal the decision.

Calls for increased action

There was a review last year of the Netherlands’ 2021 Remote Gambling Act. It suggested that measures currently in place to protect players were insufficient and were failing.

Last month, KSA chairperson Groothuizen warned against raising the online gambling age to 21, noting such a move could force younger players to the black market where there is little protection.

Groothuizen made the statement in response to a letter from the country’s state secretary for legal protection, Teun Struycken, that called for increased enforcement measures, such as a rise on the legal betting age and tougher powers for regulators.

Struycken also proposed that there should be industry-wide deposit limits. While Groothuizen welcomed the move, he raised the challenges that would come with enforcing such a measure.

Past October, player net deposit limits were enforced in the Netherlands but have been rolled out independently across licensed operators. So, if a player reaches their limit on one site, they have the ability to change to another and their limit still remains in full.

The Commission has encouraged operators to review customer profiles and monitoring procedures. This is to ensure customer risk profiles align with the “full range of risk” such as customer transactions, geographic location and product risk.

Pierce noted there are a number of “customer triggers” that are proving ineffective at handling money laundering and terrorist financing risks.

Highlighted by Pierce are procedures that do not “appropriately” consider a customer’s salary and wealth and thus fail to identify irregular spending.

The Commission believes operators are “over-relying” on self-declarations and open-source information with regard to money laundering and terrorist financing.

Additional missteps include allowing vast sums of money to be transacted before any customer AML review has taken place.

Operators failing to check their own information and relying solely on financial triggers is also increasing risk.

Pierce stated operators should consider “realistic and effective monetary and non-monetary thresholds” when determining if further information should be acquired from customers. Pierce explained that dialogue should be opened with users at an early stage in the customer relationship.

The Commission is of the view that operators are not following their own procedures to acquire source of funds information in the review process.

“We expect source of funds information to be requested on a risk-based approach but, where this is done, it should not be treated as a tick-box exercise,” Pierce said.

“It is key that staff are given sufficient guidance on how to review documents and identify red flags, how to verify source of funds information and how to record their decision making,”

Emerging online threats

The Commission’s enforcement director has also detailed several nascent threats that it is dealing with, including the growth of crypto and AI.

Pierce noted there has been a rise in customers using artificial intelligence to forge identification documents and source of funds information.

The watchdog has seen increased cases of “ID farming”, a practice where threat actors collect personal data to acquire bank accounts that are subsequently used to open gaming accounts.

Mule accounts, user accounts designed to launder money, have also increased, as have the levels of fraudulent activity in the betting sector.

Lastly, Pierce noted that while crypto currencies are not a new risk factor, the challenges they present continue to grow.

“As crypto currencies become more prevalent, we expect more payment providers to offer crypto payment facilities. Operators need to have a full understanding of the services provided by their payment providers,” Pierce said.

Earlier this month, the Gambling Commission reported that online gross gambling yield in Great Britain had increased 21% year-on-year during the fourth quarter of 2024 to £1.54 billion (€1.85 billion/$1.92 billion). Additionally, overall online bets and spins were up by 8% year-on-year to 25.9 billion.

This is despite the fact that average monthly active player accounts declined by 3% in the fourth quarter.

You’re welcome.  

A serial entrepreneur with a list of startups – in gambling and music – Eccles is clearly a diligent, hard-working, self-motivated success story.  

But here’s what you maybe don’t know. Nigel Eccles love dinos, military operations, ancient history, his dogs and his family.  

He also likes to run, mostly for the mental break it gives him – because “building start-ups is pretty stressful” – although he has done a couple of marathons.  

He also threw himself a 50th birthday with a 1920s theme, complete with games and magic. Think flapper dresses, gin Rickeys and levitation.  

So, he also likes… fun.  

How could he not? After all, this is a man who leveraged daily fantasy leagues and ultimately digital sports betting to build a fortune. He spent nine years building and innovating at FanDuel, before selling it a 58.7% stake to Flutter in 2018 for $589 million. In 2020, Flutter upped its stake in FanDuel to 95% and paid an additional $4.175 billion, according to Forbes. 

Since the 2018 sale, he’s tried his hand at a music startup, a sports group chat platform, fantasy sports platform Draftea in Mexico and the decentralised sports betting protocol BetDex.  

And now here we are. 

Pigs.  

End game is innovation 

Eccles laughs out loud when he talks about his newest venture, BetHog. The crypto casino isn’t legal in the UK or the US, but for the moment, that matters not. Because Eccles isn’t trying to make a quick buck. Just like with his foray into the sports betting world, he’s trying to build an innovative, game-changing product.  

With pigs.  

“We love gambling and we think it’s very fun and social offline,” Eccles said of himself and BetHog partners Rob Jones and Ryan Anderson. “But online, it isn’t. So, we said, ‘Let’s build a brand that accentuates the fun.’” 

Enter the pigs.  

BetHog debuted on 13 November 2024 in markets around the world from Canada (not Ontario) to New Zealand, Ireland to Asia, Latin America to Africa. It has six original titles and a crazy pig as the main character.  

BetHog raised $6 million in seed funding. The main investor is 6th Man Ventures (6MV) with contributions from angel investors Chris Grove and Josh Hannah, Advancit Capital, Bullpen Capital, Karatage and Will Ventures. 

Bacon, ham and hot dogs  

So, about the pigs.  

BetHog has six original games, including Hogger and Hodl!. The company’s main character is The Hog, an upright cartoon pig complete with tusks and stylish wardrobe. In the Bring Home That Bacon posts, The Hog is wearing a purple sports jacket and tie and has slicked-back purple hair. In another post, The Hog is casually dressed in a white button-down and mirrored sunglasses. In yet another, The Hog is wearing a chef’s hat and apron and is wielding a spatula while cooking… yep, bacon.  

Fun, right? 

The company’s X account features The Hog posts, game updates, tournament announcements and top-line sports posts. For example, on 8 December, the top post was of the first 12-team College Football Playoff bracket released in the US that day. Scattered throughout the timeline are American football posts.  

There are also some videos of Hogger and Hodl!, both featuring a streamer (a person playing the game while also interacting with others watching or playing). Eccles is also in the videos and he and the streamer are whupping and shouting as the streamer directs The Hog to cross the street in Hogger (and yes, it’s a play on the popular game Frogger).  

As The Hog makes his way across the street, tiny piglets – other players who have bet on whether The Hog will make it – follow. Unfortunately, The Hog and some of the piglets don’t make it, after being “squished” by a bus. When that happens, hot dogs and bacon and ham litter the street.  

Hodl! is a little less graphic and silly. But there is still much chuckling and chortling. It is a crash game built around the volatility of trading-meme coins. It is available in a traditional format and player versus player. Other titles are Thermonuclear Boars, in which players uncover rewards while dodging mines; Liar’s Dice, a bluffing, player versus player game; and Schrodinger’s Hog, a prediction dice game.  

BetHog is built on the blockchain platform Solana and the SOL is the main supporting token for player versus player games. BetHog also accepts Bitcoin, Ethereum and USDT. 

Let’s spice up the industry 

Pigs aside, when Eccles and his partners surveyed the gambling landscape, they were… uninspired.  

“We thought a lot of the games were really dumb and boring,” he said.  

They also thought it was interesting – or maybe astounding – that three decades after the first online casinos debuted in Antigua and Barbuda, the games being played haven’t changed, even though how digital casinos recruit customers has.  

And to date, no company has really figured out how to make online gambling the raucous, chummy, often emotionally charged social scene it is in person.  

“One of the things that has become really popular in social casinos is streaming, but the games haven’t really changed,” Eccles said. “We thought that was kind of weird… what if we think of streamers as customers, how would that change games? 

“We wanted to have a brand that makes people smile. The social part of it is something that people have thought a lot about, but we don’t think anyone has really captured that.”  

That is the first part of the idea. The second is the focus on cryptocurrency. Not a legal way to fund accounts in the UK or most US states, the digital currency has found utility in many business spaces. It is a decentralised currency built on blockchain. Cryptocurrency is owned by the consumer as opposed to by a government or bank.  

Eccles said he and his partners had experience with crypto through another startup and that the currency removes much of the friction operators struggle with when using more traditional funding methods. And it allows players to use their accounts virtually anywhere crypto is accepted without reregistering or funding an account.  

Crypto users, gamblers both embrace risk 

The marriage of gambling and crypto is, Eccles said, kind of a no-brainer.  

Serge Kassardjian and Mike Dudas of 6MV, a crypto investment company, agree. Kassardjian calls BetHog a “generational opportunity” that he and Dudas had been waiting for.  

“Crypto users have an appetite for risk and so do gamblers,” Kassardjian says. “When we looked at BetHog, Nigel is kind of the preeminent leader. When he was at FanDuel, he created fantasy and sports betting, then he created mobile – a whole new way to bet.” 

Kassardjian and Eccles crossed paths when Kassardjian was working at Google and Eccles was at FanDuel. “The product was so differentiated and innovative,” Kassardjian says of FanDuel.  He has described Eccles as “an incredible leader, a visionary”.  

Combine Eccles’ history for innovation and the desire to create a crypto gambling product and it was a fairly easy decision for Kassardjian and Dudas to invest. The pitch included videos of BetHog games as well as a demo.  

Grove is another investor whose experience with Eccles goes back to his FanDuel days.  

“I’ve always found him to be thoughtful and a generous guy,” Grove says. “I also think he has a good blend of an urge to innovate and practical experience in the gambling industry. As an investor, I often see founders with too much of one or the other.” 

Eccles agrees. That’s why, for now anyway, BetHog isn’t pushing to gain customers who are new to crypto. The platform features non-traditional games and non-traditional currency. Or, put another way, everything about BetHog is cutting edge. Trying to market to customers who are new to crypto would, in Eccles’ opinion, be too disconcerting.  

“I think today all of our players are already in crypto, so we don’t really worry about that much,” Eccles said. “So our original titles are really the thing that is new. Otherwise, if you are bringing too many things, it just confuses the player.” 

That said, Grove thinks the “next generation of online gamblers is interested in a fundamentally different game set.” And he believes that part of what could differentiate future innovation is crypto. 

“What I see in crypto is as much about culture as it is about utility,” he says. “Maybe even more so. Building a brand and a platform that resonates with crypto users offers a way to tap into that culture and community.” 

Who is the crypto casino customer? 

It’s a community that Eccles thinks will be massive, but that he is admittedly still learning about. It’s clear that those who use crypto and are into gambling are risk takers. Just like gamblers. But what’s not clear is their gender or age or location. Eccles said “crypto skews very heavily male and casino skews more female, so we don’t really know if our customers are male or female.”  

At the time of writing, BetHog had only been live for a month, so the company was early in the process of collecting data. The idea was to “swing the doors open and wait for people to show up”. 

Learning who BetHog will serve will, of course, be part of the adventure.  

In the meantime, Eccles and his partners are comfortable in the idea that crypto is the next big thing, so their job is to craft more fun, exciting, out-of-the-box games. The goal is to have a dozen original titles by this time next year. 

“I think that in five years, there won’t be ‘crypto’ casinos, because everyone betting online will be using crypto,” Eccles said.  

Another part – much further down the road – will be figuring out how to get into the UK and US. It’s not an immediate priority, but Eccles said that he thought it would be “weird” if crypto casino innovation happens completely outside of the UK and US, both of which have been on the forefront of online casino and wagering evolution. 

When the time comes, bringing BetHog to two of the inventive and expansive gambling markets in the world will be about education and engaging with regulators. But for now, BetHog will focus on building the brand and the product. 

Building a community  

Circling back to the pigs, what differentiates BetHog from a traditional online casino game isn’t just the crazy graphics and silliness. It’s the ability to participate. BetHog players can join the fun, and there are also player versus player options. 

With Flick, which combined betting and streaming, Eccles and his partners discovered “the power of social”. They came to understand that the transition from spectator to participant makes a player “very sticky”. With Flick, the struggle was to figure out “the core piece of content”. 

So, pigs.  

“Our twist is that you can bet on the streamer,” Eccles says. That’s a game changer because in Hogger “the streamer suddenly has all of this pressure when people are following him.” 

In the Hodl! game, players can be even more actively involved and can play against each other in a tournament. Eccles says they’re already witnessing player behaviour that indicates not just definitive player engagement, but also a change in tactics as the game goes on.  

“People play more aggressively if they are losing, they take more risks,” Eccles says. “And they play more conservatively if they are winning.” 

Those reactions mirror human nature. Think about what drives an American football coach to decide to go for it on fourth-and-one or for an investor to double down on a position or cash out. 

All of these things involve risk – and risk management. At the heart of crypto and casino is a taste for risk. For BetHog’s founders, there also has to be some fun. 

And pigs. Oink! 

Experiencing these creations, it was easy to picture a world where our everyday reality was just one of three, along with the augmented (AR) and the virtual (VR). Where the blockchain offered a new era of transparent gaming and where every household owned a smart fridge equipped with the latest betting apps.  

These days, however, many of these trends have fizzled out without a trace – and it’s hard to avoid feeling that the industry may have scaled back its ambitions. Have companies really lost their appetite for burgeoning technologies, or are they simply taking a more measured approach to exploring the trends of the future?  

Making the case for innovation 

Matt Howard, partner at consultancy firm Propus Partners and CEO of sports betting startup OrbitalBet, believes there are clear reasons for the death of many of the hot trends of the past decade.  

“What it always comes back to, for me, is what is the improvement you’re gaining or the problem you’re solving by building this new product feature or using this new technology?” he asks. “If you can’t answer that question, to be perfectly honest, then you’re probably not in a good place to start throwing money at those things.” 

For Howard, the short-lived excitement around VR is a case in point. When Google first launched its Google Lens headset back in 2017, many people expected widespread adoption among mainstream consumers – and not just hardcore gamers. Within the gambling industry, development teams looked for new ways to integrate this up-and-coming technology into their products, including VR headsets on their stands at major trade shows and conferences. 

“Unfortunately these things didn’t take off in the way the world expected them to,” says Howard. “Perhaps with the VR and AR stuff, the industry wasn’t necessarily asking for them. People weren’t sitting at home thinking that these were things they wanted to do with gambling.” 

Crypto and blockchain 

But not every new technology is ultimately deemed a bad fit for the industry. Other trends have proved to be a lot stickier – but only as far as operators are really in need of them. One of the best examples of this is cryptocurrency: a trend that has boomed both within the industry and outside of it. 

Since 2019, Bitcoin – the largest and best-known cryptocurrency – has risen in value by more than 2,500%, while numerous jurisdictions like Malta and Japan have incorporated crypto into their financial systems. In online betting and gaming, these currencies promise fast-paced, low-fee transactions that also have the benefit of anonymity, clear advantages for operators and their customers.  

But when it comes to blockchain, the technology underpinning crypto, the use cases are far less clear. “Loads of companies have looked at whether we should build an entire platform on blockchain. But what’s blockchain doing? Why is blockchain better than the technologies we’re using now?” asks Howard.  

Though blockchain promises highly secure payments and transactions, impracticalities emerge when you use it for the fast-paced world of betting. Operators process a huge number of bets within a short space of time.

This places immense strain on a system that creates a new block for every transaction – not to mention demanding immense energy resources. “Blockchain is a question that isn’t being asked,” says Howard. “It’s providing an answer that we haven’t needed in terms of sports betting as a whole. But it does solve a problem with payments.”  

Understanding customer needs 

For innovators in every industry, finding the next big thing is always in tension with meeting the consumer where they are. Although cutting-edge technologies may become popular and widespread over time, the public tends to move through phases when it comes to adopting these new trends.  

In Everett Rogers’ 1962 book, Diffusion of Innovations, the author charts five stages of technology adoption, with innovators and early adopters coming first and the late majority and laggards coming last. While innovators account for just 2.5% of the population, the late majority and laggards make up 50%.  

For Rich Criado, former VP of product development at US-based Fanatics Game Studios and Penn Entertainment, understanding the customer’s readiness for change is key to setting the pace of innovation.  

“In online casino there has been a lot of innovation in some areas and not so much in other areas – and a lot of that is due to the customer base,” he says. “If you look at mobile games or video games, those customers are more willing to accept big changes more quickly. Casino customers, not so much.” With VR headsets in the igaming industry, for example, there was a clear mismatch between the technology and the customers, he says. 

“The average casino customer is not going to put this giant headset on, hook it up to a computer, charge it, all the things you have to do just to play a game when they could just play on their phone,” says Criado. “So, it’s an interesting technology, but it’s not really feasible for 99% of the average customer base.” 

Incremental changes  

This doesn’t mean that change and innovation can’t happen in an industry like igaming, Criado says, but rather that it often happens in stages over time. “I don’t think the innovation is going to be some big giant new killer app,” he explains.

“I think it’s going to be incremental add-ons to what you see today, then gameplay innovations will stack on top of that and then if you look back in five years’ time, you’ll see a big difference. But as you went through it, the change was very gradual.” 

This has been the approach Criado has taken as an innovator in the young US market, introducing new features slowly over time and testing out what works with the audience. In some cases, this may be a multiplayer feature, in other cases, a crash game instead of a slot, or a new type of gamification.  

“These little things start to stack up and then you become like the EU market, right? The EU market has way more advanced games than the US market,” Criado says. “Much more like video games: very exciting and engaging and flashing and beautiful graphics. I don’t think the US market is ready for that yet, but they’re getting there.” 

Drivers of innovation 

Although some emerging technologies have failed to take off in the industry, some technologies – most notably artificial intelligence (AI) and machine learning (ML) – still have a wealth of untapped potential.  

According to Softswiss’ latest iGaming Trends report, stakeholders rated the importance of AI and ML as 8.2/10 for 2025, particularly in applications such as personalisation, decision-making automation and detecting problem gambling. However, Softswiss notes that operators should be selective in how they apply this technology. “In igaming the goal is not just to use AI for the sake of it, but to apply it with precision,” the report explains. “To stay focused and avoid shiny distractions.” 

Howard, whose OrbitalBet startup provides a customisable and highly adaptable sports betting platform for operators, agrees that AI and ML have huge potential. However, he says that legacy software often holds operators back when it comes to implementing it.

“With AI and ML, everyone knows that they should be looking at it,” he says. “You’d be wrong to ignore it. But it’s working out how to use it the right way and where it’ll make the most impact.”  

A user-centric gaming experience 

At major global operators, the trend towards personalisation has recently tended towards creating products that are uniquely flexible and customisable. At Flutter, for example, there have recently been trials in Colorado and West Virginia for a new betting product branded ‘Your Way Betting’. According to a spokesperson, the product utilises a “revolutionary new pricing model” that allows Flutter brands to offer customers “unlimited choice and flexibility in how they pick their lines”.  

Entain, meanwhile, recently relaunched their own Bet Builder product in the UK at the start of the Premier League season, offering a more customised betting experience for customers. As part of the company’s BetMGM joint venture in the US, the company also acquired specialised analytics company Angstrom Sports in late 2023, allowing them to increase the number of betting markets they offer fourfold year-on-year.  

This trend of acquiring forward-thinking, agile startups has also happened in the field of micro-betting, Howard points out. Back in August, for example, DraftKings acquired its specialist micro-betting supplier Simplebet in a deal believed to be worth up to $195m. 

“I think that innovation probably comes from the startups rather than the incumbents,” he explains. “People try things at smaller places and if that looks successful the bigger companies can do it themselves or they acquire the companies that are doing it.” 

Steep learning curve 

This has also been the trend in the US market, which has been dominated by major land-based casino brands since new igaming markets opened up in states like Pennsylvania five years ago.  

According to Criado, what was missing at the start of the US’ journey were features that boosted user engagement, such as tournaments, leaderboards, bonuses, free spins, progressive jackpots and other metagame mechanics. But these were all much more prevalent at this year’s G2E.

“I think the big players have received the feedback that we need to provide not only the base game but also the tools that allow operators to increase retention and increase engagement in their games beyond just the game itself,” he says. 

However, Criado believes the industry still has a long way to go in terms of innovation. For example, igaming operators still haven’t worked out how to transfer the excitement and social atmosphere of a brick-and-mortar casino into an online setting. Although MGM and Playtech have taken a big step towards this by streaming live games from MGM casino floors in Las Vegas. 

“I think whoever can figure that out and do it well is going to be a big winner in the next generation of operators and content providers,” Criado says. Whether that involves VR headsets remains to be seen. 

Attracting a new generation 

For Criado, who started his career at Disney and Carnival Cruise Lines, maintaining an outsider’s perspective is key to driving genuine innovation in the industry. He suggests taking inspiration from games like Fortnite, Minecraft and Grand Theft Auto, “who often do gambling mechanics better than gambling operators”. 

Although this is much easier in a far less regulated industry, the product expert recommends looking at the experiential aspects of these games and where developers make money without changing the core gameplay, such as selling skins on games like Fortnite. Innovating in this way could well be key to the industry’s survival, particularly when it comes to attracting younger generations.

“Older millennials are starting to hit 40, and they’ve grown up with video games where they control the outcome. So are they going to be interested in a game where the primary gameplay is just pressing a button over and over again? Probably not,” he says.  

Looking to the future

Creating a sense of control in a game of chance comes with its own challenges, of course, but it is possible. During his time at Fanatics, Criado worked on a game called Field Goal Frenzy in which players aim to kick at the goal on a virtual American Football field. To make the experience more interactive, the player can choose how far away they want to stand from the goal, with higher distances equating to a lower likelihood of winning but a higher jackpot. 

“It’s not control over the mathematical outcome of the game, but it still feels like as a player I have more control over my overall experience, which is ultimately the key,” Criado explains. 

This type of playful experiment could be the way for the industry to look forward, not just to new technologies, but also to new types of players and new generations. 

While the audience may not be demanding this type of experience right this minute, it could be a crucial innovation when a new group of players starts exploring casino products in five or ten years’ time. “The thing that excites me the most right now is that the runway that’s in front of us for innovation is so great,” says Criado. “And we haven’t even started, to be honest.”  

This offering allows participants to trade predictions on sports event outcomes. At time of launch, the only trading option available on the platform was for the upcoming Super Bowl.

Crypto.com users can make a prediction on which team they think will win the NFL’s championship game. In the app, various teams are listed with their probabilities, giving users easy access to select.

The product’s release aligns with Crypto.com’s commitment of expanding its portfolio of regulated trading products. It is also focused on solidifying its presence in the burgeoning event-driven trading market.

Timing of launch strategic

Although a first in the sports trading arena, the new product draws parallels to other event contracts offered by Crypto.com. UpDown Options and Strike Options, which are cryptocurrency derivatives regulated by the Commodity Futures Trading Commission (CFTC). As a company operating under the oversight of the CFTC, Crypto.com must adhere to certain regulatory requirements that ensure a compliant trading environment for its users.

The timing of the launch, just ahead of the holiday season, offers Crypto.com a strategic opportunity. It could attract early adopters and build momentum during a period of heightened consumer engagement. By focusing on the Super Bowl, the platform is looking to capitalise on the popularity of the event to introduce users to its unique approach to an activity that at least strongly resembles traditional sports betting.

Read the full story here.

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casino/igaming industry, with news, features and original reporting on industry happenings, business, legislation, regulations and more.

Among this offering were online games of chance, more commonly known as slots, which are currently not legal in France.

ANJ approached Adventure One QSS, which is licensed in Panama, over the matter in late November. It was agreed the operator would put in place a geoblocking system to prevent access from players in French territory.

Incidentally, the case first came to light around a month ago when Bloomberg reported that the ANJ could take action against Polymarket.com. The geolocation block came into effect on 21 November, according to other reports.

The regulator said any players impacted by the decision should contact Adventure One QSS for more information.

Polymarket has faced similar issues in the US where is not legally allowed to operate. It paid a $1.4 million fine to the Commodity Futures Trading Commission in 2022 after it failed to register with the agency. Trading was paused at the time.

Illegal games of chance can lead to jail time

Offering illegal games in France is deemed a criminal offence and could lead to jail time. This could result in three years’ imprisonment and a €90,000 (£74,557/$94,609) fine. However, this increases to seven years’ imprisonment and a €200,000 fine if the offence is committed by an organised group.

To date, the ANJ has blocked more than 944 URLs for breaching gambling laws in France. Its blacklist is frequently updated and available on its website.

“In general, the ANJ would like to warn people who play on illegal sites because they are exposing themselves to particularly serious risks,” the ANJ said. “These include the non-payment of winnings, payment method fraud, identity theft and installation of malicious computer programmes.

“If you have any doubts about the legality of the gambling website, consult the list of sites approved by the ANJ.”

Could we see legal online slots in France next year?

The possible legalisation of online slots in France has been a topic of discussion for some time. In October, the French government showed its strongest indication yet that it could move forward with such plans.

The government put forward an amendment to its 2025 budget to legalise online casino games. Budget minister Laurent Saint-Martin then confirmed a six-month consultation on the matter will take place next year.

Due to the length of this process, it is unlikely any new law will pass during 2025. However, should the consultation come back with positive results, it could lead to legislation for legal slots to launch in 2026.

Legal real-money gaming, with an estimated daily player base of 90 million, grew 28% from 2020 to 2023, according to the report. It’s on pace to generate $7.5 billion (£5.8 billion/€6.9 billion) by 2029. But “vulnerabilities within India’s online gaming ecosystem… pose significant challenges to financial integrity.”

The think tank called for “enhanced oversight, stronger KYC practices and improved [anti-money laundering] systems by financial institutions.”

Illegal operators use trickery to lure patrons

DIF co-founder Arvind Gupta expressed special concern about the explosion of illegal online betting sites.

“Despite ongoing regulatory efforts,” he said, according to the Hans India, “many platforms circumvent restrictions” using VPNs, mirror sites, geo-blockers and other workarounds.

In addition, they trick unwitting players with “illegal branding and disproportionate promises” the report added. The use of cryptocurrencies or cash for payments facilitates money laundering, as virtual assets can make ill-gotten gains seem legitimate.

“The enhanced ability to transfer and convert gaming assets into fiat currency or crypto-assets has resulted in a rise in money laundering and fraud,” the report stated.

The DIF recommends:

• A dedicated task force to combat illegal igaming
• A white list of approved operators, domestic and offshore
• A commitment by the government to identify and block illegal operators
• A public awareness campaign to warn players about potentially fraudulent operations

A threat to “digital nagriks”

A July report from Rashtriya Raksha University echoed these warnings. The university’s Security and Scientific Technical Research Association (SASTRA) also recommended white listing legitimate igaming platforms that comply with India law.

Illegal sites expose internet users, known in India as “digital nagriks”, to “cybersecurity attacks and unsafe online environments”, said SASTRA. “They have emerged as a threat to India’s national security… [acting] as channels for money laundering and terrorist financing.”

Illegal online betting generates an estimated $100 billion per year, far outstripping the legal take.

“These rogue players siphon money out of our economy, leaving a trail of financial instability, thereby fuelling criminal activity,” SASTRA said, as reported by the New Delhi Business Standard.

The online gaming sector is vital to India’s future and warrants additional safeguards, noted Gupta.

“With over 400 home-grown start-ups,” he said, “the sector employs directly and indirectly approximately [100,000] individuals, with the potential to create 2.5 million jobs by 2025.”

The government’s ministry of finance is setting up a team of eight civil servants who will specifically work on preventing illegal sites from taking and receiving payments, according to Celia.

The team will process complaints from the sector and seek to punish unlicensed payment providers and illegal sites.

Blocking Pix payments will be successful

One measure the government has publicly announced is blocking payments involving illegal operators made via Pix, an instant payment service controlled by the Central Bank of Brazil which the majority of the betting market uses.

Regulators in other markets like Germany and across Europe have struggled to block payments to and from black market players due to various legal reasons.

But Celia believes banning illegal transactions via Pix will be a successful measure in Brazil as it is operated by the Central Bank and ultimately controlled by the government.

“If any commercial bank isn’t aware they have a company or client that is using illegal sites, as soon as they receive a warning from the Central Bank they will shut down their bank account immediately,” Celia said.

“If they don’t, they’ll be subject to fines. There’s no point for any commercial bank in Brazil to allow those accounts to process Pix once they are notified.”

Pay4Fun is authorised by the Central Bank to provide payments services to various entertainment sectors, including betting and gaming.

The Central Bank will be a key figure in the legal betting market in Brazil as payment providers will require its authorisation to operate.

“The Central Bank has the power and systems to stop any company that’s [not licensed], because they have direct communication with all the [commercial] banks and with us [as licensed payment providers],” Celia said.

Illegal sites not left with many options

With Pix no longer an option, Celia says unlicensed operators will have very few payment options left as cash and cryptocurrency will face huge political challenges.

“Cash is limited, a lot of people in Brazil are not using it anymore. And how do you get cash for an online operation? You need local people, brokers, affiliates, to receive and send money to operators. This is very complicated and it’s almost impossible to send money out of Brazil using illegal channels.”

Licensed operators will not be allowed to accept crypto payments, as per Normative Ordinance No 615.

Celia is confident the Central Bank will be able to identify crypto payments being taken by the black market. “Crypto in Brazil is only used as an asset for investments, not as a payment method,” he said.

“To buy crypto here you need an account for a crypto exchange, meaning you have to provide personal data and the Central Bank is on top of that.”

Celia concluded: “We’ll have to wait [and see], but for unlicensed sites, it will be difficult to operate here.”

Most documents around the lawsuit are under seal and the docket does not indicate when the seal may be lifted. The NFLPA’s attorney filed a court order asking to file redacted documents. David Greenspan, an antitrust, sports and complex-commercial litigator with the New York City firm Winston & Strawn LLP, is listed as the NFLPA counsel.

Greenspan has previously worked with athletes and has won multiple anti-trust class-action lawsuits against the NCAA. Those cases centred around the NCAA’s “pay for play” model and NIL issues.

DraftKings, based in Boston, is a sports betting partner with the NFL. It launched an NFT marketplace in August 2021 and billed it as opportunity for collectors. Consumers were able to purchase the NFTs and ultimately moved them into a digital wallet or sell them on DraftKings’ secondary NFT marketplace. The NFTs were created by Autograph.

DraftKings was not the only tech company to launch NFTs. But the excitement around the products peaked and faded quickly. The bookmaker last month abruptly shut down its NFT business on 30 July, according to Yahoo! Finance, citing legal issues.

NFTs subject of a Massachusetts’ lawsuit

“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly and we believe it is the right course of action,” the company said in a statement at that time.

There is another active lawsuit surrounding the NFT business in Massachusetts. At issue is whether or not the NFTs are considered securities and if selling them violates SEC rules.

When DraftKings launched the line, it did so with the belief that NFTs had the potential to grow into a “gigantic” business, co-founder Matt Kalish told Yahoo!.

In gambling, aside from countries where a pari-mutuel (tote) operator has a monopoly on betting, there is a variety of choice. For example, in Australia, there are around 100 wagering operators and in the UK there are 175 online operators. Before the internet, bookmakers would typically earn and retain market share through physical high street betting shops, which gave the industry a natural barrier to entry.

In the UK, Ladbrokes and William Hill emerged as the initial market leaders among a wide field of operators. By 1999, at the dawn of the internet era, there were 8,500 UK betting shops. As with Amazon, the internet changed the way people shop for bets, leading to a steady decline in high street betting shops. In their place, technology-led operators like Flutter and Bet365 emerged. 

Bet365’s humble beginnings

When Denise Coates bought the domain name Bet365.com on eBay for a reported $25,000, she saw an opportunity to transform the family’s small chain of betting shops based around Stoke-on-Trent into a high-tech, online business. Coates’ ensuing strategy, execution and growth was nothing short of extraordinary.

Founded in 2000 with just 12 employees, Coates saw the internet as the future of wagering and sold the family betting shop business by 2005. In contrast, rival betting operators opted to keep a foot in each door, with a dual focus across the nascent internet opportunity and the profitable betting shop business.

Since launching, Bet365 grew rapidly by offering innovative ways to bet and an extensive range of sports, events and casino games. The user experience is intuitive and simple, with customers able to listen, watch and bet in-play with ease.

Widely used features such as early payouts for winning selections, best odds guaranteed, cash outs and multi/parlay boosts are products of Bet365’s leading customer experience innovation.

In-play with Ray

The marketing efforts of Bet365 have attracted and retained a customer base that now stands at 90 million users worldwide. The legendary ‘in-play with Ray’ adverts, featuring actor Ray Winstone, are iconic and highlight Bet365’s leading in-play product.

More recently, Bet365 showcased the attention they pay to every sport through their ‘never ordinary’ curling advert. The ability to watch and bet on live niche sports such as table tennis is something that few other operators can compete with.

Growing global with a localised product

Bet365 holds licences in South America, Europe, Australasia, Canada and a growing number of states in the US. In markets where they have a foothold, content is tailored specifically, with language and product considerations (such as sport popularity).

When commercially viable, Bet365 will move; when not, they will wait (as they did with the US) and, in some instances, they will withdraw. In October 2023 for instance, it withdrew from India due to a 28% goods and services tax.

As we first discussed in May 2021, US online operators have fought for market share by spending up to US$1,000 to acquire customers. Ultimately, some operators have withdrawn from the competitive market, such as Churchill Downs.

“The online betting and casino space is highly competitive with an ever-increasing number of participants… Many are pursuing maximum market share in every state with limited regard for short-term or potentially even long-term profitability”

– Churchill Downs’ CEO, William Carstanjen (February 2022)

JMP Securities estimates 74 companies have entered the regulated US online wagering market since 2018. Of these, 43 (58%) are still operational while 18 (24%) have ceased operations and 10 (14%) have significantly reduced their presence or are in the process of shutting down. Three (4%) have been acquired.

Throughout this highly competitive period, Bet365 patiently remained on the sidelines. The company only expanded out of New Jersey in September 2022, more than four years after the US market opened up, growing quickly to 10 states. Early data reveals the sportsbook’s growing popularity, with total US app download market share over 7%.

Upping the Stakes

As highlighted in our June 2024 newsletter, emerging wagering businesses have the greatest chance of success if they focus on dominating a niche without a clear market leader. Another privately-owned wagering business which has disrupted the status quo is Stake.com.

Founded in 2017 by Ed Craven and Bijan Tehrani, Stake has increased its gross gaming revenue 25-fold from $105 million in 2020 to nearly $2.6 billion in 2023 (FT). Stake’s growth has driven Craven’s personal wealth of AU$4.51 billion and his purchase of Melbourne’s most expensive home for $80 million in 2022 (Australian Financial Review).

The success of Stake has been rooted in its ability to appeal to a younger, more tech-savvy demographic. In countries where regulation permits, users can bet using cryptocurrencies, which has revolutionised the online wagering experience.

For Stake, cryptocurrency payments reduce operational expenses tied to conventional payment methods, which means that they can increase technology investments, offer larger bonuses, better promotions and superior odds. In countries where crypto betting is not legislated, Stake has gained market share through engaging streaming content, improved UX and strategic partnerships.

Global presence

Stake has grown its global awareness and built trust through a series of Premier sponsorships and an entry into Formula 1, as the title sponsor of the Alfa Romeo team. The operator has targeted a younger demographic through partnerships with the UFC, where millennials make up 40% of the fanbase (Play Today).

While other operators have retracted their presence from India, Stake has become the first operator to allow customers to deposit in Indian rupees. We discussed the Indian wagering opportunity in March last year. Stake also entered the South American market, acquiring Betfair Colombia in November 2023.

The founders of Stake (headquartered in Australia) recently invested in Australian wagering operator Pointsbet. In May, the Australian Financial Review reported that Stake’s owners had acquired a 5% shareholding in the business.

Stake increasing its shareholding in fully licensed operators such as Pointsbet may signal a broader strategy which parallels Bet365: to operate globally and pay high tax domestically. Last year, the Coates family paid £375.9 million in UK tax and is often cited as one of the UK’s largest taxpayers.

Kicking competition

Stake has created vibrant betting communities through partnerships with celebrities like Drake, leveraging streaming technology so that viewers can effectively watch, comment and engage with wagering. Kick, a streaming platform owned by the founders of Stake, was launched in early 2023 and is quickly gaining traction among streamers and viewers alike.

As discussed in our August 2023 newsletter, Kick stands out from other platforms like Twitch due to its supportive stance on betting streams. Since April 2023, Kick’s number of active channels has nearly tripled from around 67,000 to 183,922 (Streams Charts).

As the internet enabled Amazon to disrupt traditional commerce, so too did it allow Bet365 and Flutter to disrupt the traditional wagering model. Twenty years on, Stake is disrupting the incumbent operators through innovation across product, payments and customer engagement.

For wholesale investors interested in following wagering and gaming industry news and trends, please follow our updates on Twitter (@waterhousevc) or through our website at WaterhouseVC.com.

The wagering industry has long been at the forefront of innovation across several areas, including user experience (UX), marketing and payments. Online crypto operators (such as Sportsbet.io and Stake.com), which have a similar UX to online fiat operators like FanDuel and DraftKings, are already recording extraordinary turnover and leading innovation in both marketing and payments.

As at May 2022, Sportsbet.io recorded US$2.7bn (£2.12bn/€2.51bn) of turnover per month and we gather that it has likely grown. To put that in perspective, in 2023, Australia’s largest operator averaged US$1bn of turnover per month and has around 45% market share in the country.

Influencer marketing

Stake and other large crypto wagering operators dominate streaming through partnerships with celebrities like Drake. Rather than partnering with celebrity streamers, emerging operators like Shuffle.com identify influencers with small but dedicated followings of around 1,000 to 10,000 true fans.

Micro-influencers are cost-effective because they are often undervalued or overlooked by established wagering operators.

Dedicated fans do not just engage with influencers by “liking” their posts or watching a 30-minute betting stream. Instead, they interact directly with the influencers in group chats, communicating around the clock. An influencer with 10,000 “dedicated fans’” could generate far more revenue for every dollar spent than an influencer with 1,000,000 followers who are less engaged.

Shuffling

Launched in 2023, Shuffle is one of several new crypto wagering businesses at the forefront of marketing, customer retention and payments innovation. The company has rapidly expanded and already facilitated more than US$6bn in bets.

Led by Noah Dummett, Shuffle’s management team draws on expertise developed in marketing roles rather than traditional wagering industry experience.

Noah, a 24-year-old crypto native from Australia, was an early employee at some of the fastest-growing crypto exchanges, such as Bitmex. He believes crypto wagering operators can be just as large and profitable as the exchanges he worked at previously.

Noah believes that Shuffle can become the world’s largest crypto wagering operator and that achieving this will take bold bets executed by a young, energetic and laser-focused team. Today, Shuffle has 55 full-time employees, with an average age of 24 years old, and plans to double the number of employees in the next 18 months.

Ishan Haque recognises the power of influencer marketing and community-building, tapping into live streaming, betting group chats and crypto communities.

Hollywood!

Similarly to dominant operators like Stake, Shuffle intends to announce large-scale brand ambassadors and endorsements later this year with Tier 1 sport teams and mainstream celebrities/athletes. Initially, smaller operators have to methodically pursue deals where there is high return on advertising spend.

Larger marketing deals should only be pursued once experience has been developed through successful smaller deals. The key metrics measured across smaller and larger deals are the same:

• How many eyeballs convert to sign-ups
• How many sign-ups convert to first-time deposits
• How long can depositing players be retained

These metrics allow operators to reverse engineer expectations for larger deals, which are typically more difficult to value.

Retaining customers

Once an operator has identified influencers to collaborate with, it is often difficult to maintain engagement after an influencer’s initial promotion, resulting in a surge of customer sign-ups followed by a period of inactivity. There are several ways to improve customer retention, including personalised offers, community engagement and ongoing promotions that span the entire duration of the influencer partnership.

Haque attributes Shuffle’s early success to acting on product feedback and iterating swiftly. He believes that even the best marketing and retention strategies are ineffective if the product is not engaging.

Shuffle’s platform features a custom-built UI and in-house developed games that prioritise speed and user experience. For example, Shuffle has developed tools like “Advanced Dice” for custom auto-betting, whereby users can seamlessly switch between games like plinko, blackjack, NBA parlays and election bets without any lag.

Furthermore, Shuffle’s casino games boast some of the highest return to player rates (RTPs) in the industry, with house games at 99% and slots at 97%.

At Waterhouse VC, we believe that offering a full suite of world-class wagering products is critical to success. This is one of the reasons why we focus on investing in B2B suppliers rather than B2C operators. In a highly competitive industry, B2B suppliers are critical for operators to differentiate through product and user experience.

How to get started?

Emerging wagering businesses (both B2B and B2C) have the greatest chance of success if they focus on dominating a niche without a clear market leader. For Shuffle, that meant focusing early growth on Japan, a market that was underserved by crypto wagering operators at the time.

Marketing to multiple regions requires an understanding of the complexities of localisation, culture and acquisition channels.

Instead, new operators could focus on one market by hiring native speakers, offering localised support, aligning the brand with the local culture and understanding what kind of content locals look at. Such a growth strategy is particularly relevant for newly regulated markets like Brazil.

Companies like Shuffle, Stake and Sportsbet.io have proven that a differentiated product, marketing strategy and user experience can fuel rapid revenue growth in the highly competitive wagering industry.

Media

I recently discussed the US competitive landscape on Ausbiz. I spoke about increasing taxation and regulation in the maturing US wagering industry, which puts pressure on subscale B2C operators’ ability to compete.

For wholesale investors interested in following wagering and gaming industry news and trends, please follow our updates on Twitter (@waterhousevc) or through our website at WaterhouseVC.com.

DISCLAIMER AND IMPORTANT NOTES

Please note the above information in relation to Shuffle.com, Sportsbet.io, Bitmex, YouTube, Stake, FanDuel, Flutter Entertainment Plc and DraftKings is based on publicly available information in relation to the company and should not be considered nor construed as financial product advice. The fund currently has a position in Flutter Entertainment Plc. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

Not for Release or Distribution in the United States of America

This material may not be released or distributed in the United States. This material does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction in which such an offer would be illegal. The units in the Fund have not been, and will not be, registered under the US Securities Act of 1933, as amended (the US Securities Act) or the securities laws of any state or other jurisdiction of the United States. Accordingly, the units in the fund may not be offered or sold in the United States unless they are offered and sold, directly or indirectly, in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and any other applicable United States state securities laws.

General Information Only

This material is for general information only and is not an offer for the purchase or sale of any financial product or service. The material has been prepared for investors who qualify as wholesale clients under sections 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. The material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by Sandford Capital, Waterhouse VC or any other person. To the maximum extent possible, Sandford Capital, Waterhouse VC or any other person do not accept any liability for any statement in this material.

Financial Regulatory Oversight and Administration

Waterhouse VC is an Australian Unit Trust denominated in AUD and available to wholesale institutional investors worldwide with a minimum of AUD 500,000 or USD / EUR / GBP / JPY / CHF equivalent. This material has been prepared by Waterhouse VC Pty Ltd (ABN 48 635 494 861) (‘Waterhouse VC’, ‘Trustee’, ‘us’ or ‘we’) as the Trustee of the Waterhouse VC Fund (the ‘Fund’). The Trustee is a corporate authorised representative (CAR 1278656) of Sandford Capital Pty Limited (ABN 82 600 590 887) (AFSL 461981) (Sandford Capital) and appoints Sandford Capital as its AFS licensed intermediary under s911A(2)(b) of the Corporations Act 2001 (Cth) to arrange for the offer to issue, vary or dispose of units in the Fund.

Performance

Past performance of Waterhouse VC is not a reliable indicator of future performance. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of an investor’s capital or any specific rate of return. No allowance has been made for taxation, where applicable. We encourage you to think of investing as a long-term pursuit.

Copyright

Copyright © Waterhouse VC Pty Ltd ACN 635 494 861. No part of this message, or its content, may be reproduced in any form without the prior consent of Waterhouse VC.

Governing Law

These Terms and Conditions of use are governed by and are to be construed in accordance with the laws of New South Wales. By accepting these Terms and Conditions of use, you agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning these Terms and Conditions of use.

Net revenue is calculated by taking operational deductions off gross gaming revenue total. Incidentally, gross gaming revenue in Q1 was also down 35.8% to $7.7m, with declines across both sports betting and igaming.

However, when reflecting on the result, Salz was mainly optimistic. He spoke about a record revenue margin of 58.5%, the highest in the history of Rivalry. Salz also noted a quarter-on-quarter increase in player spending during Q1.

“We are very encouraged by the improvement to net revenue margin experienced in Q1, hitting an all-time record, proving our strategy is delivering results and representing a meaningful improvement as compared to the average levels experienced throughout 2023,” Salz said.

“Additionally, interest in our original casino content continues to build, unlocking B2B revenue opportunities that we are keen to detail more fully in the near future.”

Rivalry launches new crypto token

Salz also focused heavily on the launch of the operator’s new crypto token: Rivalry Token. This, the operator says, will add increased functionality, economics and user experiences across its product suite.

Rivalry Token is set to launch in the second half, with Salz adding that it represents one of several forthcoming initiatives to position Rivalry in the crypto gambling market and better serve its core audience of under-30 bettors.

Following the launch, the token will be available to customers in all Rivalry active markets, excluding Ontario and Australia.

“Rivalry is well-positioned to access the growth opportunity in crypto with a proven product set, a brand entrenched in internet culture and a captive audience of digitally native users that are driving this economic renaissance,” Salz said.

“The launch, alongside a broader expansion into cryptocurrencies, strengthens our product-market fit among an under-30 audience. It positions us competitively to capture a meaningful share of this fast-growing and highly valuable segment of the market.”

Quarter-on-quarter growth for Rivalry

While the impact of Rivalry Token will not be known until later in the year, Rivalry has some work to do to improve on its Q1 results.

Both net revenue and gross gaming revenue were lower year-on-year. This was mainly due to a drop in core sportsbook gross gaming revenue, which fell 39.8% to $6.2m. Gross gaming revenue from igaming was also down but not as sharply, with the reported $1.5m down 11.8% from last year.

However, as highlighted by Salz, there was reason for positivity in terms of player spending in Q1. Total betting handle during the quarter hit $94.7m, up 11.3% from $85.1m in Q4 of last year.

Incidentally, both net revenue and gross gaming revenue were also higher on a quarter-on-quarter basis. Net revenue climbed 50.0% while gross gaming revenue improved by 20.3%.

Net loss increases in Q1

Turning now to spending, operational deductions from gross gaming revenue hit $3.2m. This is an improvement on the $6.5m deducted in Q1 of 2023.

Total operating expenses were up 6.7% to $9.6m, with higher spending across marketing and promotions, as well as technology and content. Rivalry also noted $141,083 in net financial costs.

With no tax reported, this left a net loss of $5.2m, compared to $3.3m in Q1 last year. After also accounting for a negative foreign currency translation impact of $498,111, Rivalry ended Q1 with a comprehensive net loss of $5.7m, wider than last year’s $3.9m.

This month, we shine a spotlight on three distinct leaders in the industry: Tim Heath, a crypto wagering pioneer; Peter Jackson, CEO of Flutter Entertainment; and David Walsh, renowned as one of the world’s largest professional horse racing gamblers.

Over the last decade, the online wagering industry has expanded significantly through the proliferation of mobile-focused platforms. Heath and Jackson lead companies at the forefront of digital innovation in the industry.

YOLO

Originally from Australia, Heath is a serial wagering industry entrepreneur and venture capitalist. After university, he started a software development and ecommerce firm, Heathmont.net.

In 2013, he launched Coingaming Group, a crypto wagering operator and supplier which rebranded to Yolo Group in 2021. Yolo Group is now most known for its large B2C wagering operators, Sportsbet.io and Bitcasino.io. We have discussed the rapid growth of crypto wagering and Sportsbet.io in previous newsletters.

With over 600 employees, Yolo is a well-established group of businesses across wagering and venture investing. Yolo’s B2C brands pioneered the integration of streaming for all major sports and were very early innovators of the now common “cashout” feature.

Sportsbet.io and Bitcasino.io offer players withdrawal times as fast as just 1.5 minutes, ranking among the swiftest in the industry.

Heath’s relentless focus on customer experience has made Sportsbet.io one of the largest global crypto wagering operators. The company records over US$2.7bn of turnover per month. To put that in perspective, in 2023, Australia’s largest operator averaged US$1.2bn of turnover per month and has around 50% market share in the country.

What’s next for him? One thing he would like to reform is the international payments landscape, which today predominantly relies on the SWIFT system. He believes that SWIFT has several inefficiencies, such as delays and lack of privacy.

World domination

Jackson, meanwhile, has been the CEO of Flutter Entertainment since January 2018. Under his stewardship, the company’s valuation has doubled and it is now the world’s largest publicly listed wagering company. Only Bet365 – privately owned by the Coates family – comes close to Flutter in global scale.

Flutter is the only publicly listed B2C wagering operator in our portfolio at Waterhouse VC.

Jackson graduated with a degree in manufacturing engineering from Cambridge and honed his skills during a three-year stint at McKinsey. He then transitioned to various roles at the Halifax Bank of Scotland until its acquisition by Lloyds in 2009.

At 34, he was appointed the CEO at Travelex, a foreign exchange company. He led the company for five years, bolstering revenues and eventually overseeing its £1bn sale. He served on the board of Betfair from 2013 before being appointed Flutter’s CEO five years later.

Early on in his tenure, Jackson recognised the importance of scale and efficiency in an industry which is highly taxed and highly regulated. Leveraging his experience in consulting and banking, Jackson has developed operations that lead their respective markets through a combination of organic expansion and M&A activity – such as MaxBet and Junglee Games.

The flywheel effect

By leveraging the broader Flutter Group’s access to global industry knowledge, technological development, customer insights and data analytics, each of Flutter’s divisions benefits from a “flywheel” effect.

This flywheel has driven Flutter’s US business, FanDuel, to an 11-fold increase in revenue from US$300m in 2018 to around US$3.3bn in 2022, with an industry-leading 37% market share today.

Jackson was instrumental in effecting the recent dual-listing of Flutter on the New York Stock Exchange (NYSE:FLUT). The company listed on 29 January this year, enhancing access to US capital markets and simplifying the provision of stock incentives to employees based in the United States.

Historically, US equities have commanded higher valuations compared to other global equity markets. Flutter’s shareholders stand to gain from an increased valuation, while the company could leverage its premium valuation to raise cheaper additional capital.

MONA

The wagering industry provides entertainment to people at a cost. There is a very small group of people who bet profitably – they do not need to pay for the entertainment.

We believe that, globally, there are fewer than 50 betting syndicates capable of winning at scale. David Walsh is regarded as one of the world’s most successful gamblers through the syndicate in which he is partnered with Zeljko Ranogajec.

The syndicate bets globally on horse racing, sports, lotto, casino and financial markets. It has been reported that the syndicate turns over in excess of $3bn per year. However, some estimate that their global turnover is far higher.

Walsh invested $75m to open the Museum of Old and New Art (MONA). As a result of his contributions, Walsh was honoured as an Officer of the Order of Australia (AO) for his outstanding service to the visual arts and for his support of various cultural, charitable, sporting and educational organisations.

Can emerging syndicates compete?

Professional bettors are incredibly bright and have a rare skillset. They understand the unique dynamics of each sporting code/casino game/lottery back to front.

They are able to model 100s of factors that predict the “true” likelihood of a result. Then they can put it all together to run a professional betting business, which relies on managing a huge number of people.

Focusing on racing in particular, a team of experts in mathematics, statistics and computer science regularly develop, maintain and refine algorithms that assess vast amounts of historical racing data and individual factors specific to racing – such as track conditions, jockey statistics, sectionals, weather and bloodlines – to inform betting decisions.

As discussed last month, racing betting syndicates are also advantaged by receiving rebates on their wagers regardless of the outcome. To qualify for the rebates, syndicates must wager vast amounts of money. The rebates effectively enhance their existing “edge”, making it increasingly challenging for emerging syndicates to compete in racing.

Waterhouse VC is a fund for wholesale investors, specialising in global publicly listed and private businesses related to wagering and gaming.

Since inception in August 2019, Waterhouse VC has achieved a gross total return of 2,858% as at 29 February 2024, assuming the reinvestment of all distributions.

At the beginning of the year, Fabio Panetta, board member at the European Central Bank, proposed that trading unbacked cryptocurrencies should be managed under gambling laws by regulators. Panetta pointed to the collapse of several crypto schemes throughout 2022. He argues that these were the result of poor structure and disfunction in the crypto market.

While some existing laws – such as the EU’s Regulation on Markets in Crypto Assets – focus on regulating crypto, Panetta said that more needs to be done to manage the industry effectively.

One group that experienced issues with crypto in 2023 was Stake.com. The Drake-backed company was the victim of several unauthorised crypto transfers in September. This affected the Ethereum, Polygon and the Binance Smart Chain wallets on Stake.com.

While Stake.com did not confirm how much had been stolen, media reports within the crypto community suggested that $41.3m (£32.8m/€38.4m) was taken.

The growth of crypto gambling

While crypto has its critics, some in the industry voiced support for it in 2023.

Joe McCallum, then-managing director of Yolo Group spoke to iGB about the company’s aims to offer gambling with cryptocurrency to a wider audience. This includes re-directing its offer to the 25-35 age bracket. This is the group that makes up a large part of the social media generation.

As the owner of Sportsbet.io and Bitcasino – two crypto gambling services – Yolo Group is well placed to take on the crypto opportunity in the year ahead.

In May, the European Council passed regulations requiring crypto businesses to be authorised. The passage kicked off a countdown for European national authorities. At the time, they were given three months to create the relevant authorisation framework.

“Expanding into the Colombia market is a strategic decision that aligns perfectly with our vision for growth and innovation,” said Brais Pena, chief strategy officer at Easygo, the founder of Stake.com.

“Colombia’s position as the first regulated market in Latin America makes it an ideal destination for Stake’s expansion, with the intention of being one of the dominant players in the market in two years.”

Plans beyond Colombia

With Stake acquiring Betfair Colombia, the operator plans for Colombia to serve as its base for growth throughout Latin America, with its current licence approved until 2025. This follows Betfair’s initial launch on the market in Latin America’s second-largest market in 2020.

In total, Coljuegos has issued more than 20 licences since Colombia regulated in 2017. The regulator collected more than $140m dollars in taxation of GGR between January and August of 2023, representing a growth of 16.7% year-on-year.

As well as Colombia, Stake has already secured market access in Mexico and Paraguay through agreements with local operators and it has expressed interest in future regulated markets in Peru and Brazil.

The operator has also signed a raft of brand ambassadors targeting the Americas in recent years. These include Argentinian football legend, Sergio Aguero, rapper Drake and the Alfa Romeo Formula 1 team.

Stake has also been the official Latin American betting partner for the Ultimate Fighting Championship (UFC) since 2021.

“We view the Colombian market as a pivotal entry point for our Latin American expansion,” Brais Pena added. “We are committed to contributing positively to the local economy, fostering innovation and delivering exceptional entertainment value to our customers.”

The incident impacted Ethereum, Polygon and the Binance Smart Chain (BSC) on Stake.com. All other wallets were unaffected, Stake.com said, and operations returned to normal five hours after the issue was flagged.

Reports at the time suggested the operator was exploited for $41.3m (£33.1m/€38.6m). This figure has now been confirmed by the FBI, with the Bureau blaming Lazarus Group for the theft.

Also known as APT38, Lazarus Group is affiliated with Democratic People’s Republic of Korea (DPRK).

According to the FBI, cyber actors moved the stolen funds from Stake.com into a number of virtual currency addresses. 

FBI highlights Lazarus involvement in other attacks

The FBI added that the same group has been responsible for other high-profile international virtual currency heists. So far this year, the group is believed to have stolen more than $200.0m, including virtual currency. 

“The FBI will continue to expose and combat the DPRK’s use of illicit activities to generate revenue for the regime,” the FBI said. “This includes cybercrime and virtual currency theft.”

The FBI is encouraging anyone with information on the matter to contact the Bureau.

Launched in 2017, Stake.com has more than 500,000 users registered around the world. Its network stretches across countries including Canada, Brazil, Japan and the UK.

In a post on X, Stake.com said that unauthorised transfers were made from a number of its hot wallets. However, it added that user funds were safe.

Stake.com also said the incident only impacted the named wallets, with other wallets such as Bitcoin, Litecoin and XRP remaining fully operational throughout.

Following an investigation, Stake.com published another post on X five hours later to confirm services were back to normal.

“All services have resumed,” Stake.com said in the update. “Deposits and withdrawals are processing instantly for all currencies. We apologise for any inconvenience.”

Media reports $41.3m stolen

Stake.com did not disclose any further details about the incident. However, several reports within the cryptocurrency community suggest the operator was exploited for $41.3m (£32.8m/€38.4m).

Launched in 2017, Stake.com has more than 500,000 users registered around the world. Its network stretches across countries including Canada, Brazil, Japan and the UK.

The website also has in place a number of major sponsor deals across football and the Ultimate Fighting Championship. This includes a main, front-of-shirt sponsorship agreement with English Premier League club Everton.

Stake.com’s UK-facing website, Stake.uk.com, is operated in partnership with TGP Europe, which is licensed by the British Gambling Commission.

The primary revenue models employed are revenue sharing and cost per acquisition (CPA). There are several strategies for wagering affiliates to channel traffic towards bookmakers. These include creating sports-centric media content or contrasting various bookmakers’ odds and promotions.

An example of one of the most well-known bookmaker comparison websites is Oddschecker. The platform compares odds and promotions from more than 25 UK bookmakers while also offering betting tips and insights.

Emerging markets

Affiliates like Oddschecker particularly thrive in emerging markets, like the US, where operators fight fiercely for customer acquisition. Both large and small operators spend up to $1,000 to acquire a customer. This leverages all available marketing channels, including affiliate marketing.

The two largest US wagering operators spend over $1bn on marketing.

A number of affiliates have identified the potential in the US market. As such, they are concentrating their their organic growth and M&A activity in this region.

In May 2021, Better Collective completed its $240m acquisition of The Action Network. The Action Network offers odds comparison, various podcasts and other types of media content.

In July 2021, Bruin Capital purchased Oddschecker from Flutter for a potential total of $218m – $190m upfront, plus deferred considerations. With this acquisition, Bruin plans to enhance Oddschecker’s services while supporting its foray into the lucrative US market.

“There are strong links between Oddschecker’s UK development and its opportunity in the US, where the marketplace is very fragmented, and discovery and customer acquisition experts will be highly sought after,” said George Pyne, founder of Bruin Capital.

Furthermore, in November 2021, FansUnite acquired American Affiliate, a collection of US affiliate websites, for $58.2m – equivalent to 9.7x EBITDA. At the time of the acquisition, American Affiliate had delivered 150,000 new depositing customers to US wagering operators. These include DraftKings, FanDuel and BetMGM.

Checking the crypto odds

While the US and other newly regulated markets present exciting opportunities for affiliates, we are particularly enthusiastic about the prospects for affiliates focused on directing bettors towards crypto wagering operators.

We last covered the broader opportunity in crypto wagering in May. According to GlobeNewswire, the global online wagering industry generated revenues of approximately $58.2bn in 2021, with a projection of $145.6bn by 2030.

We foresee that the industry’s future growth will primarily be driven by the widespread adoption of crypto wagering.

Similar to the US market dynamics, numerous crypto wagering operators are currently vying for market share. Consequently, affiliates are well-remunerated for delivering depositing bettors to crypto operators. Revenue shares offered to affiliates can be as high as 50%.

We believe that there is a particularly significant opportunity for a comparison website dedicated to crypto operators. This untapped opportunity will remain attractive as the crypto wagering industry matures.

Considering that OddsChecker was sold for $218m and generates 97% of its revenue from the UK, an odds comparison website operating in the substantially larger crypto wagering segment presents an immense opportunity.

Furthermore, unlike crypto operators themselves, affiliates are typically valued at a significantly higher multiple of earnings. For example, Better Collective is currently valued at 12.5x EBITDA.

Betscanner 

Betscanner’s main service will be to compare odds from sporting events offered by crypto bookmakers.

The data required for odds comparison will be obtained either via data scraping or through direct partnerships with the bookmakers. There will be a focus on improving live odds comparison, user experience and esports.

Revenue sources will include operators paying monthly retainers to not only drive new traffic but also ensure that they retain existing users through market visibility. Marketing tactics will encompass SEO, Google Ads, influencer marketing, social media campaigns and exclusive sign-up bonuses.

Betscanner is one of several exciting opportunities that Waterhouse VC is participating in.

DISCLAIMER AND IMPORTANT NOTES

Please note the above information in relation to OddsChecker, FanDuel, DraftKings, Better Collective, The Action Network, Bruin Capital, Flutter, FansUnite, American Affiliate and BetMGM is based on publicly available information in relation to the company and should not be considered nor construed as financial product advice. The above information in relation to Betscanner is based on information provided by the company and should not be considered nor construed as financial product advice. Waterhouse VC has an option deal and has signed an agreement with Betscanner. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

General Information Only

This material is for general information only and is not an offer for the purchase or sale of any financial product or service. The material has been prepared for investors who qualify as wholesale clients under sections 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. The material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by Sandford Capital, Waterhouse VC or any other person. To the maximum extent possible, Sandford Capital, Waterhouse VC or any other person do not accept any liability for any statement in this material.

Financial Regulatory Oversight and Administration

Waterhouse VC is an Australian Unit Trust denominated in AUD and available to wholesale institutional investors worldwide with a minimum of AUD 1,000,000 or USD / EUR / GBP / JPY / CHF equivalent.  This material has been prepared by Waterhouse VC Pty Ltd (ABN 48 635 494 861) (‘Waterhouse VC’, ‘Trustee’, ‘us’ or ‘we’) as the Trustee of the Waterhouse VC Fund (the ‘Fund’). The Trustee is a corporate authorised representative (CAR 1296688) of Sandford Capital Pty Limited (ABN 82 600 590 887) (AFSL 461981) (Sandford Capital) and appoints Sandford Capital as its AFS licensed intermediary under s911A(2)(b) of the Corporations Act 2001 (Cth) to arrange for the offer to issue, vary or dispose of units in the Fund.

Performance

Past performance of Waterhouse VC is not a reliable indicator of future performance. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of an investor’s capital or any specific rate of return. No allowance has been made for taxation, where applicable. We encourage you to think of investing as a long-term pursuit.

Copyright

Copyright © Waterhouse VC Pty Ltd ACN 635 494 861. No part of this message, or its content, may be reproduced in any form without the prior consent of Waterhouse VC.

Governing Law

These Terms and Conditions of use are governed by and are to be construed in accordance with the laws of New South Wales. By accepting these Terms and Conditions of use, you agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning these Terms and Conditions of use.

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The global online betting industry generated revenues of circa $58.2bn in 2021, with $145.6bn expected by 2030. We expect that the increased penetration of crypto betting will drive the majority of industry growth.

Sportsbet.io already records $2.7bn in turnover per month. To put that in perspective, in 2021, Australia’s largest operator averaged $1.2bn of turnover per month and has around 50% market share in the country.

Sportsbet.io has formed strategic partnerships with several prestigious football clubs, such as Southampton, Arsenal and São Paolo.

Why cryptocurrency?

Cryptocurrencies such as Bitcoin, Ethereum and Litecoin facilitate quick and smooth transactions with lower fees compared to conventional methods. This not only delivers near-immediate payouts, but also minimises operational expenses for crypto wagering businesses.

Players benefit from rapid and efficient deposits and withdrawals, as well as anonymity, security and data privacy when betting online.

Operators like Stake.com and BitStarz Casino have already developed a superior user experience (UX) to online fiat operators. Online crypto operators are focused incessantly on the customer and are now leading the industry with respect to UX. Legacy operators, meanwhile, have generally been slower to adapt.

For example, Stake.com regularly develops new slots games, while maintaining its own Stake Originals house games. 

Customers of crypto wagering operators benefit from far larger bonuses, offers and superior odds. This is because operators pass on some of their several cost savings. These include lower deposit/withdrawal transaction costs and lower product fees compared to fiat operators.

The below selection of Trustpilot scores demonstrates players’ preference for newer crypto operators – represented by Stake.com and BitStarz Casino – over mature fiat operators.

New age wagering platforms

Within the crypto wagering segment, there is a unique opportunity for cutting edge back-end platforms for crypto wagering operators.

While there are numerous existing platforms for fiat operators – such as Kambi, SBTech, Entain, OpenBet, Amelco and Aspire Global – there are just a handful of platforms built for crypto operators.

Having assessed these platforms, we believe that several gaps remain in their functionality.

We have summarised the core capabilities that we would expect in cutting-edge wagering platforms here. Most existing platform providers are built on legacy technology. These require significant development work for any changes to be made to the platform.

Modern platforms should offer racing, sports and gaming, while seamlessly integrating payment options in both cryptocurrency and traditional fiat currencies. New platforms should incorporate cryptocurrency as an integral part of their technological framework, rather than treating it as an afterthought.

One of the benefits of investing in a wagering platform is the diversification of revenue across a global client base of operators. Platforms typically charge an integration fee as well as up to 25% of gross gaming revenue (GGR) depending on the number and type of services provided.

Some platforms also charge out developers for optional ongoing development costs. By taking a share of revenue from numerous operators, crypto wagering platforms are leveraged to the growth of the entire segment rather than facing the operational risk of one crypto wagering business.

Sanco Technology

An essential part of Waterhouse VC’s strategy is identifying management teams with substantial domain expertise. In this case, we have looked for teams with expertise in constructing and managing successful wagering platforms operating in highly competitive markets.

One such team has launched Sanco Technology, a private company currently raising money for its platform build. 

Sanco’s platform will be set up to have “plug & play” crypto integration functionality and will serve a global client base, with a particular focus on emerging crypto wagering operators. The platform will be built in a modular fashion to allow for self-customisation from all operator clients.

Sanco Technology is one of several exciting crypto wagering opportunities that Waterhouse VC is participating in.

DISCLAIMER AND IMPORTANT NOTES

The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

General Information Only

This material is for general information only and is not an offer for the purchase or sale of any financial product or service. The material has been prepared for investors who qualify as wholesale clients under sections 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. The material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by Sandford Capital, Waterhouse VC or any other person. To the maximum extent possible, Sandford Capital, Waterhouse VC or any other person do not accept any liability for any statement in this material.

Financial Regulatory Oversight and Administration

Waterhouse VC is an Australian Unit Trust denominated in AUD and available to wholesale institutional investors worldwide with a minimum of AUD 1,000,000 or USD/EUR/GBP/JPY /CHF equivalent. This material has been prepared by Waterhouse VC Pty Ltd (ABN 48 635 494 861) (‘Waterhouse VC’, ‘Trustee’, ‘us’ or ‘we’) as the Trustee of the Waterhouse VC Fund (the ‘Fund’). The Trustee is a corporate authorised representative (CAR 1296688) of Sandford Capital Pty Limited (ABN 82 600 590 887) (AFSL 461981) (Sandford Capital) and appoints Sandford Capital as its AFS licensed intermediary under s911A(2)(b) of the Corporations Act 2001 (Cth) to arrange for the offer to issue, vary or dispose of units in the Fund.

Performance

Past performance of Waterhouse VC is not a reliable indicator of future performance. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of an investor’s capital or any specific rate of return. No allowance has been made for taxation, where applicable. We encourage you to think of investing as a long-term pursuit.

Copyright

Copyright © Waterhouse VC Pty Ltd ACN 635 494 861. No part of this message, or its content, may be reproduced in any form without the prior consent of Waterhouse VC.

Governing Law

These Terms and Conditions of use are governed by and are to be construed in accordance with the laws of New South Wales. By accepting these Terms and Conditions of use, you agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning these Terms and Conditions of use.

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AS: If we compare typical crypto adopters to fiat users, the former generally represent younger generations originating from Canada, Germany and Asia. Depending on the geography and age, we can see the difference between the audiences of various crypto brands – the so-called crypto gambling pioneers like Bitstarz and MBit, and the second wave brands like Stake, Roobet, Rollbit, Duelbits and BC.Game. The latter strives to build a strong brand-centred community, using chats and forums, which helps not only engage but also retain players. 

These are just a few aspects that make a difference, alongside the transaction speed, availability of provably fair games and others. 

iGB: How has the growing competition and demand on the crypto market affected early crypto adopters such as Softswiss?

AS: I wouldn’t say that the crypto gambling market is particularly competitive – the competition is steadily growing, but it is still far from its high. We see market majors taking an interest in crypto gambling, with many considering integration of payment methods such as Coinspaid to enable crypto deposits. Some opt for launching separate crypto brands to reinforce their product portfolios with new crypto-centric offerings of the same design and functionality similar to Stake.com, Bitstarz, MBit, Rollbit, Duelbits, Roobet and BC.Game. 

Many market players are cautiously interested rather than willing to enter the niche. And we can see a sound reasoning behind their behaviour, such as having no crypto expertise or strong expert teams, difficulties in finding traffic to attract the crypto audience, crypto gambling regulations and the overall regulators’ attitude to cryptocurrencies as to something non-existent. However, the niche is actively evolving and the market leaders I mentioned above are now followed by new high-potential entrants capable of making great strides, like Stake.com in 2021.   

iGB: How have you worked to ensure your crypto gaming products stand out from the competition – what does Softswiss offer that can’t be found elsewhere in the market?

AS: First and foremost, it is the expertise and vast experience in using and integrating cryptocurrencies in gambling. Being a trailblazer in this niche and the first company to bring crypto to the B2B sector, Softswiss makes the crypto gambling development an integral part of its strategy. In particular, it includes building knowledge and expertise within the team, developing crypto-friendly products and staying ahead of the product trends we observe across crypto brands.

All products in the Softswiss ecosystem (the Casino Platform, the Game Aggregator, the Sportsbook, the Jackpot Aggregator and Affilka) are compatible with cryptocurrencies, with our partner product – crypto payment gateway Coinspaid – being a basic option to launch cryptocurrency operations. For example, the Softswiss Game Aggregator currently supports about 50 game providers in using 20+ different cryptocurrencies and is able to integrate new ones upon request from its clients and partners.

The in-game currency conversion feature integrated into our flagship Casino Platform is a unique solution that allows crypto balance holders to access and enjoy non-crypto games. The Softswiss Sportsbook and the Jackpot Aggregator are also fully equipped to work with cryptocurrencies.

iGB: When it comes to raising awareness about the adoption of cryptocurrency for gambling, where else do you feel education is needed? Among operators, suppliers or even regulators, perhaps?

AS: Regarding regulations, I believe the industry needs closer cooperation between businesses and regulators to harness crypto. The segment has great growth potential and is expected to gain a significant market share in the future, therefore regulators should factor crypto into their law-making activities relating to gambling. Such cooperation would be beneficial for all parties involved, as it would increase transparency and establish a regulatory framework for the use of cryptocurrencies in the most promising markets.

Unfortunately, the issue is commonly overlooked by regulators in most jurisdictions. We can understand it as there is often a lack of legal frameworks to address the adoption and subsequent legalisation of cryptocurrencies in general, let alone rules for their use in gambling. But it is definitely worth the effort and our company is ready to help bridge the gap between businesses and regulators.

We provide full support, both informational and technical, to help operators and game studios onboard cryptocurrencies. The products in our portfolio allow accepting all digital coins right from the start and our experts are there to help solve any complicated issues and walk clients through the entire process of cryptocurrency integration. We believe that training and instructing operational teams on the use of crypto is yet another growth area for us to develop and reinforce our offering.

iGB: Recently, Softswiss was recognised as the Crypto Company of the Year at the 2023 International Gaming Awards. What distinguishes you from competitors in terms of cryptocurrency operations and what innovations in this field do you offer to the market?

AS: We are very pleased to have this award and, more importantly, the industry’s recognition as a leader in crypto gambling. This award is a true reflection of our strategy and passion – making crypto accessible and convenient for use. Years ago, Softswiss dared to tackle the most progressive innovations and integrate crypto into gambling, pushing the industry to its new heights.   

I would go so far as to say that the nomination and the award were not a big surprise for us, as the company had come a long way, refining its expertise, developing multiple features and adjusting standard operations for the crypto audience. Nine out of ten crypto gambling leaders leverage our products. All this proves that Softswiss is an undisputed leader in crypto gambling.     

iGB: What are your predictions for cryptocurrency going into 2023? What could hinder its adoption?

AS: Despite the volatility we are observing, the crypto gambling sector and its audience will continue to grow, as it is speed, simplicity and a certain level of anonymity that players value most in cryptocurrencies. We can clearly see an increasing interest in this niche and a growing number of operators, including top-tiers, are adding crypto to their payment methods.

Online crypto operators have a similar user experience to online fiat operators. The likes of Stake.com and Sportsbet.io already record extraordinary turnover.

White label platform solutions for crypto betting operators are leveraged to the growth of crypto wagering as a whole. This means they are not exposed to the operational and regulatory risk of a single crypto wagering business.

Existing wagering platforms

Many fiat operators rely on white label sportsbook and igaming platform solutions, such as Kambi, OpenBet and SBTech. 

However, our research concludes that many existing platforms have been built without all core internal needs across marketing, trading, operations, customer service and compliance.

Some lack customisation, while changes typically require further costly development. The customer profiling and risk configurations mean poor experiences for highly profitable players, and deeper losses to negative value customers. Some platforms are unable to keep up with customer demands or provide segmented customer experience.

All of the above existing platforms were founded over 12 years ago. Some continue to rely on legacy technology. Technical debt compounds over time and is a key challenge for platforms, as well as technology companies more broadly.

Crypto: The future of wagering platforms?

There is a significant opportunity to develop a new breed of wagering platforms that combine racing, sports and gaming with both crypto and fiat payment capabilities. Key core platform capabilities are summarised below:

We are seeing opportunities emerging to invest in the next generation of wagering platforms. These leverage new technology and embed modern third party integrations. Such platforms integrate crypto at the technology layer rather than as an afterthought.

Considering the continued growth of crypto betting globally as well as all online wagering in the US, we are very excited by the possible opportunities. A key element of our approach will be to identify management teams, with significant experience in the direct build and operation of successful platforms in competitive markets.

Since inception in August 2019, Waterhouse VC has achieved a total return of 2,057% as at 30 April 2022, assuming the reinvestment of all distributions.

Panetta argued that these events were correlated, reflecting structural factors and inadequacies in the functioning of the crypto market.  

“These failures occurred in rapid succession, reflecting crypto players’ incredibly high leverage, their interconnectedness across the crypto ecosystem and their inadequate governance structures,” said Panetta.

The economist also commented on how little contagion there had been from the crypto failures to the wider market. However, Panetta disputed that the cryptocurrency generally would “self-combust” out of existence.

Gambling activity

According to central bankers, while unbacked crypto assets do not perform any socially or economically useful function, the assets are rarely used for payments and do not fund consumption or investment – ultimately they are better understood as a method of gambling than as an economic instrument. 

“As a form of investment, unbacked cryptos lack any intrinsic value, too. They are speculative assets. Investors buy them with the sole objective of selling them on at a higher price,” he said. “In fact, they are a gamble disguised as an investment asset.”

“But it is precisely for this reason that we cannot expect them to disappear. People have always gambled in many different ways. And in the digital era, unbacked cryptos are likely to continue to be a vehicle for gambling.”

The social cost of crypto

Panetta also elaborated on the social costs of an unregulated cryptocurrency market. He pointed to the large losses experienced by investors in a variety of crypto businesses.

“Uninformed investors were left with significant losses,” he said. “It is not just cryptos that are being burnt.”

Beyond the immediate social consequences of an unregulated crypto market, the former Bank of Italy official commented that such digital assets allow for bad actors to evade taxes, launder money, finance terrorism and circumvent sanctions. Crypto, he said, also poses significant environmental questions.

“That is why we cannot afford to leave cryptos unregulated,” he said. “We need to build guardrails that address regulatory gaps and arbitrage and tackle the significant social costs of cryptos head-on.”

According to Panetta, this will not be a simple process.

“Like Ulysses, they must resist the beguiling crypto sirens to avoid falling prey to the industry’s intense lobbying. And on their journey, they must steer clear of the Scylla of poor regulation and the Charybdis of legitimising unsound crypto models.”

Current framework

Panetta applauded existing laws such as the EU’s Regulation on Markets in Crypto-Assets – but stated that “further work” was needed to ensure the entirety of the industry is regulated, including so-called “decentralised finance” activities such as crypto asset lending or non-custodial wallet services. Panetta proposed a framework similar to the existing regulation of online gambling.  

“Regulation should acknowledge the speculative nature of unbacked cryptos and treat them as gambling activities,” he said. “Vulnerable consumers should be protected through principles similar to those recommended by the European Commission for online gambling. They should be taxed in accordance with the costs they impose on society.”

It will offer cryptocurrency gambling through both its white-label product and its own Vbet brand.

Earlier in the year, BetConstruct announced it will accept Fasttoken (FTN) as a supported cryptocurrency.

The integration of cryptocurrencies, or VFAs (Virtual Financial Assets), has been part of the Maltese government’s temporary “Sandbox Framework” to examine the use of cryptocurrency by licensed gaming operators.

This framework was set to end on 30 December 2022; however, it has been extended to 28 February of this year.

The crypto platform, named as Elray Blockchain System (EBS), is expected to launch in the coming months.

Golden Matrix deal

Elray added that it had also reached an exclusive distribution agreement with virtuals supplier Golden Matrix Group, wherein it will acquire all gaming content for crypto operators from Golden Matrix.

B2B online crypto casino systems and technology from the Elray Gaming division will now feature content provided exclusively by Golden Matrix.

Golden Matrix chief financial officer Cathy Feng spoke highly of the future of crypto gambling, despite the company agreeing to sell the arm of the business dealing with this sector.

“Bitcoin casinos are now one of the latest trends in the online gambling industry and they will shape the future of online gambling as we know it,” Feng said. “Crypto casinos have many advantages over traditional casinos, such as faster payments, improved security and better transparency. 

“Some of the best bitcoin casinos on the market already have hundreds of thousands of active players hailing from all corners of the world. “The latest bitcoin gambling statistics show that the interest in crypto gambling is on the rise as players continue to choose cryptocurrencies for the many advantages that they offer.”

During this inspection, it found that LuckyCrypto has information in Sweden, has a Swedish version of its terms and conditions and that it “directs its marketing towards Swedish customers”.

In addition, Swedish customers were not prevented from registering on the site.

SG International, which is based in Curaçao, was given the opportunity to respond to Spelinspektionen, but the regulator did not receive a response.

As a result, it added the operator to its list of illegal sites.

According to the regulator’s strategy for tackling unlicensed activity, the order to leave the market is the first step in the enforcement process. Those that fail to comply will then be hit with fines, and should this fail to deter the operator, it will turn to the police.

In September, Selinspektionen ordered Casineia.com operator Ease Gaming NV, also based in Curaçao, to exit the market.

In June, the Swedish government announced that it had scrapped plans to give authorities the power to block all offshore unlicensed gambling, regardless of whether or not the site is specifically aimed at Swedish consumers.

Its sportsbook offering will allow clients to accept payments from cryptocurrency as well as fiat money and will include a “travelling wallet” to allow players to use the same wallet in different jurisdictions.

PlayEngine was initially created through the Berkeley Skydeck startup incubator.

“I am very excited about being a co-founder and the CEO of PlayEngine,” Laila Mintas said. “The sports betting and igaming market is just too competitive to work off legacy tech. 

“There is a huge need for agile and modern technology and I truly believe that we have the most automated and data-driven product in the market, which will enable the sportsbetting and igaming operators to offer an innovative, robust and profitable product to their end-customers.”

Fellow PlayEngine co-founder Aram Cherkezyan said Mintas’ track record made her the ideal person to lead the business.

“Dr Mintas has a proven track record of building high-growth companies successfully and is a well-established and respected leader in the sports betting and igaming world and we are very happy to be working together with her.”

Laila Mintas PlayUp dispute

Mintas previously worked as chief executive of PlayUp’s US operations and deputy president for Sportradar, in which she oversaw US operations.

However her exit from PlayUp became the subject of a legal dispute after the operator claimed that she had deliberately sabotaged a sale of the business to cryptocurrency platform FTX after new contract talks broke down. Taking the matter to court, it was granted a temporary restraining order against Mintas.

Mintas said these allegations were untrue and appealed the temporary restraining order. In December of last year, a US district judge for Nevada sided with Mintas and the order was thrown out, a decision that was later upheld in the Ninth Circuit Court of Appeals.

Former FanDuel executives Varun Sudhakar, Stuart Tonner and Nigel Eccles serve as CEO, CTO and chairman of the new business, which they founded just over a year ago. Soon after founding, BetDex announced an initial investment round, raising $21m.

Varun Sudhakar, CEO and co-founder of BetDex said: “Today’s news is an exciting step forward for the BetDex Exchange. With the licensing and regulatory approval, BetDex now boasts the first fully-regulated sports betting platform in the Web3 space, and we’re excited to welcome bettors from approved regions.”

Abby Kimber, head of egaming with the Isle of Man government, said: “It is a pleasure to welcome BetDex to the island. We are excited to be at the forefront of technologies like blockchain while maintaining our reputation as a highly regulated jurisdiction that prides itself on player protection. I wish BetDex every success with their future ventures and look forward to partnering with them for many years to come.”

The exchange just entered Open Beta, accepting wagers from more than 12,000 early access players in the past weeks. It accepts wagers from select countries throughout South America, Europe, Asia and Africa. The BetDex Exchange currently offers peer-to-peer sports wagers on soccer and is expecting to announce additional sports in the near future.

At the time, it said the banned online casino sites would be ones that “aren’t licensed either in the US or other jurisdictions that provide sufficient customer protection”.

It listed cryptocurrency casinos Stake.com, Rollbit, Duelbits and Roobet as operators that all would be banned.

That ban came into force yesterday and, as a result, Twitch updated its community guidelines with some more detail on the general criteria for what sites might be prohibited.

Rather than providing specifics of this, Twitch simply said: “We consider many factors in determining whether a site is allowed, including whether the site includes safety protections, such as deposit limits, waiting periods and age verification systems. 

“We also take into account whether streamers use or encourage VPNs to evade geoblocking, and whether the site is licensed in the US or other jurisdictions that provide sufficient consumer protections,” it added.

Again, it listed Stake.com, Rollbit, Duelbits and Roobet as banned sites and said it may add others to this list in the future.

Streaming free-to-play social versions of these websites is also banned. However, Twitch reiterated that it would still allow streams of sites that focus mostly on fantasy sports, sports betting or poker.

According to the ACMA, the websites were operating in breach of the Interactive Gambling Act 2001, and as such were offering online gambling in Australia illegally.

Blocking requests from the ACMA, the first of which was issued in November 2019, have led to 619 illegal gambling and affiliate websites being blocked in the country.

In addition, more than 180 illegal services have pulled out of the Australian market since the ACMA began enforcing new illegal offshore gambling rules in 2017.

The latest round of blocking orders comes after the ACMA last month flagged a number of other sites for operating without the relevant approval.

These brands included Spin Oasis, Fab Spins, RB Carnival, The GoGo Room, Velvet Spin, Zenith Slots, Slots of Wins, Latinbet24, Hell Spin, Sky Crown, Blue Leo, Wolf Winner, Bizzo Casino, Wabo88 and Ozbet88.

In other Australian news this week, land-based resort operator Star Entertainment had its New South Wales licence suspended and ordered to pay a penalty of AUS$100m (£55.8m/€64.2m/US$63.1m) in response to failings in the Australian state.

Last month, Star was declared unsuitable to hold a casino licence in New South Wales after Adam Bell SC’s report outlined a host of anti-money laundering and social responsibility failings at Star Sydney stretching back for years.

An incomplete list of the misconduct included successful attempts to circumvent Chinese capital flight laws by deceptively reclassifying gambling spend as hotel expenses on China Union Pay (CUP) cards, lying to banking institutions regarding these payments and allowing an entity with likely links to organised crime to conduct cage operations in its casino.

Aoki will cooperate on and promote digital collectibles in the DraftKings Marketplace, with Aoki’s first group of products, Aoki 2022 All-Star Access Pass, set to be released on 14 September.

DraftKings co-founder Matt Kalish commented on the announcement:

 “Steve Aoki is globally recognised for his contributions to the music industry and more recently, for his involvement with digital collectibles. I am excited to welcome him to the DraftKings family.

“Having him on board will provide us with a refreshing perspective for future, community-driven projects, and I look forward to bringing new experiences to our customers and to Steve’s fans.”

Aoki added: “I am excited to be working with DraftKings to build out the next generation of fantasy sports. Through Reignmakers Football, DraftKings customers can have ownership of their rosters in an innovative way that Web3 can provide.”

DraftKings launched its NFT market in August 2021, initially featuring products involving celebrities such as Wayne Gretzky, Tony Hawk, Naomi Osaka and Tiger Woods. The worldwide NFT market suffered in 2022, as part of the year’s wider decline in cryptocurrency prices.

I have delved into these from a professional and personal standpoint, advised clients and helped develop a couple of web3 projects. I have tried my best to put aside my initial scepticism about the technology and its development and formulate a positive outlook towards the future of this field.

The exercise has yielded mixed results. As a technologist, I feel excited about the potential of the field, while as an artist I feel that NFTs have the potential to bring an evolutionary step to the way we create, perceive and consume digital art. They could also bring an element of fairness and control to royalty distribution, changing the art market to its core. As an analytical and rational realist, however, there remain too many questions unanswered, too many complications, and too much fluff for me to yet become a true believer in the field.

When I project myself well into the future, I have no problem seeing that these technologies will become ubiquitous in our lives. In my view, though, it will be in a way that is quite different to what we are experiencing today, and not really in the spirit of blockchain technology as it was originally intended.

The bitcoin whitepaper was quite clear as to its intention – to create a payment system allowing “online payments to be sent directly from one party to another without going through a financial institution.”[1] It is in this spirit of anarchy or, as some might put it, technological democracy, that the entire world of crypto has been created. It is a noble and worthwhile cause. Governments, regulators, financial institutions and other large, powerful and centralised entities have been a central part of the cause of where we are today. When powerful entities are able to act against the interest of the working classes with impunity, because they are “too big to fail”, it fuels an environment of greed.

Having said this, it is unfortunately human nature to be this way, and it does seem to me that creating a decentralised financial system on its own, without any safeguards, is not really solving the issue. Whether there is a workable solution at all is a question I – and undoubtedly many others – wish I had an answer to. My usual reaction to such conundrums is that we need to seek a balance – a middle ground – somewhere between extreme centralisation of power and complete unencumbered decentralisation[2].

At this point, you may be wondering where this all came from, and whether it is purely an unfounded opinion – a feeling – or whether there is some substance to it. Over the past months I have had discussions with several people from all walks of life, both in a private and public setting. There are some very key aspects that have led me to construct my outlook, including my own experiences. I will try to synthesise these facts, to allow you, as a reader, to form your own view.

Far from ubiquitous

First and foremost, although blockchain technology has gained enough popularity to start affecting global markets, it remains, in the grand scheme, a very niche field. By mid-2022, it is estimated that around 300 million people own at least one crypto wallet[3][4]. That represents just over 4% of the world population. The growth has been steady, and indications are that this might reach 1 billion by the end of 2022 (14% of the global population) – although I have some reservations about this number. When comparing this to the 76% of the world population having a bank account as of 2021[5], it is clear to see that there is a long road ahead.

When it comes to NFTs, research involving 1,000 US citizens showed that around 4% of the population had created or traded in 2022[6]. Even though this doubled year-on-year compared to the previous year, once again we are very far from NFTs being considered ubiquitous. The share of online art sales (which includes non-NFT sales made online) compared to the offline art market is still negligible, although NFTs are mostly used to purchase collectibles rather than art[7][8].

Far from simple

The above brings us to the second point. One of the disadvantages of having a decentralised finance system is that there is still a lack of organisation.

I compare the situation with traditional finance systems, as in essence they are in direct competition. In order to have a bank account, deposit money, store it and retrieve it, one does not really need to understand the underlying banking system. There is a meta-layer on top which simplifies and essentially hides the process enough to make it accessible. There are also well-established processes and securities in place to ensure that our money is safe and accessible.

When it comes to crypto, we’re delving into a pretty much bottomless pit. Granted, exchanges such as Binance have become much more user friendly, and there are some regulations surrounding them to ensure a level of security. However, it still remains clear that one has to have some understanding of why blockchain exists, how it works and how to use it. It still remains more in the realm of stock-trading rather than banking.

The general instability of cryptocurrencies (including those that are supposedly stable) means that in reality they fail the “money” test, particularly when it comes to it being a store of value[9]. Value caps for even the most popular cryptocurrencies are only a small percentage of fiat currencies, and have very few safeguards against their collapse, making them very vulnerable to market manipulation (in a similar way to stock exchanges in the 1920s prior to regulatory bodies being introduced – a situation that pretty much led to the great depression).

This lack of simplicity, the uncertainty, inaccessibility and volatility of the market is a major hurdle towards greater adoption. I am doubtful that this situation will ever be resolved while the system remains entirely decentralised and unregulated.

Far from safe

Crypto has always been pegged as very safe or “unhackable”, and indeed, the blockchain technology that underlies it all is very secure from a mathematical point of view. However, a lack of control, lack of processes and piecemeal development of web3 wallets has opened several holes allowing for various hacks, scams and general cybercrime to take place. The average number of hacking incidents in 2022 was around double that of the same period in 2021, leading to a total of almost $2bn in lost assets[10][11] – and this excludes scams and personal wallets being hacked with the use of “sweeper bots”[12] and other means.

The decentralisation of finance is clearly a double-edged sword. Removing the trusted intermediaries such as financial institutions clearly provides for more freedom to own and control assets, however it also means that we are giving up the protection that these entities provide. Bottom line: we must take the whole package. Most people will not want to accept the risks that come with the freedom, even (and maybe even more so) if they have the time and technical aptitude to understand the intricacies of the system itself, its flaws, and its dangers.

As things stand right now, there is no wallet or blockchain or NFT smart contract that can be truly trusted. Those who invest in blockchain regularly will use a hardware wallet, keeping the wallet’s sensitive details completely offline. It is a step in the right direction, but there is not enough awareness of its importance within the general public to make enough of a dent, not to mention the potentially off-putting technical knowhow required to use one.

Far from over

The next months will be interesting to observe. At the moment of writing, ethereum is preparing for the big merge which will bring the blockchain into a proof of stake consensus, hopefully reducing its environmental impact and the exorbitant costs of transactions significantly[13], assuming it all goes through without a hitch[14].

In the meantime, NFT transactions on Opensea have dropped by 99% compared to their high point[15], raising several questions about their future, viability, and most importantly, their relevance. The sceptics are all crawling out of the woodwork proudly bearing “I told you so” signs. They are not entirely wrong – NFTs, blockchain, cryptocurrencies and all related technology still lack the one fundamental ingredient: purpose. Until a real-world use case is found for these technologies, they will remain in the realm of niche.

However, they are not entirely right, either, and not all is doom and gloom. The recent collapses, the increase in security breaches and a greater awareness – both at an individual level as well as governmental – are signs of a maturing industry. Looking back at history, new and revolutionary systems, such as the stock exchange and the internet itself, all went through a period of hype, abuse and collapse before enjoying greater stability, acceptance and growth. I believe blockchain is no different. Over the next years we will see greater acceptance towards the inevitability of regulation and some form of control. As much as we would like to believe we are able to fend for ourselves and do not need some form of centralised authority to provide direction and control, it is unfortunately clear to me that this is far from being the case. Bad actors within a system will always exist, and they cannot be controlled by technology alone. It might be that we keep forgetting that a large portion of the mechanics of any system is driven by human nature, and this can only be stabilised through social structures.

On the other hand, the tendency of governments is to take full control through (sometimes extreme) regulation. We can see this through the efforts being carried out in the US via the SEC listing some cryptocurrencies as securities[16][17]. This is another swing of the pendulum observed in any evolving industry. It is yet to be seen how things might eventually stabilise, given that the blockchain system (very much like the internet itself) was designed to have a certain immunity to regulation.

All this means that the future is still quite unpredictable. But unpredictable also means interesting – and interesting leads to opportunity. The bottom line is that we are still in the early days of an industry rife with potential. This is the point where innovation happens, where those with a vision can bring new things to the table, and where those who are willing to take a chance can lay out their course towards success.

The next months and years will be unequivocally important, and society will be different from here on out. I, for one, am excited to see how things will evolve.

[1] https://bitcoin.org/bitcoin.pdf
[2] As a personal note, I am trying to avoid the use of the word anarchy, since it is often misinterpreted as lawlessness, violence and chaos. My interpretation is more on the lines of giving more control to the individual, with as light a form of government as may be possible. This does not automatically result in chaos; however the discussion and nuance surrounding such interpretations is not one that will benefit this article.
[3] https://earthweb.com/cryptocurrency-statistics/
[4] https://buybitcoinworldwide.com/cryptocurrency-statistics/
[5] https://www.worldbank.org/en/publication/globalfindex
[6] https://www.security.org/digital-security/nft-market-analysis/
[7] https://www.statista.com/statistics/1236560/online-and-offline-sales-share-fine-art-auctions-in-selected-global-countries/
[8] https://www.statista.com/statistics/1299636/sales-value-art-and-collectibles-nfts-worldwide/
[9] https://corporatefinanceinstitute.com/resources/knowledge/valuation/store-of-value/
[10] https://finbold.com/crypto-hackers-loot-2-billion-in-h1-2022-as-cybercriminals-thrive/
[11] https://blog.chainalysis.com/reports/2022-defi-hacks/
[12] https://community.trustwallet.com/t/what-is-crypto-bot-sweeping-everything-about-this-scam-strategy/488179
[13] https://nftnow.com/features/ethereum-merge-heres-what-to-expect-from-the-groundbreaking-move/
[14] https://decrypt.co/108791/ethereum-merge-almost-here-what-could-go-wrong
[15] https://stephenmoore.medium.com/the-nft-boom-is-over-trading-volume-on-opensea-falls-99-a31e00f109b0
[16] https://www.forbes.com/sites/ninabambysheva/2022/08/02/binanceus-delists-cryptocurrency-sec-deemed-a-security/?sh=4533f3f314ac
[17] https://www.bloomberg.com/news/articles/2022-07-29/why-crypto-flinches-when-sec-calls-coins-securities-quicktake#xj4y7vzkg

Sergio Muscat is the founder of Oxygia, a boutique management consultancy specialising in strategic, operational and human insight advisory. With several years of experience in project management, business analysis, operations and payments among others, Oxygia assists organisations of any size and industry to investigate, manage and adapt to the future.

Photo by JD Photography on Unsplash

Stake.com is known for its cryptocurrency offering, though in Great Britain – where cryptocurrency gambling is not permitted by the Gambling Commission – it operates on a white label licence held by TGP Europe, which also has deals with a number of other Premier League sponsors. 

The operator has signed a number of other major sponsorship agreements of late, including brand ambassador deals with former Manchester City striker Sergio Agüero and Canadian rapper Drake. Last year, the operator agreed a multi-year deal with Watford FC.

“Stake.com is an ambitious organisation with impressive growth plans and we’re all very excited to enter into a partnership with them at this stage in their journey,” Everton chief executive Denise Barrett-Baxendale said. 

She added that the record deal was secured thanks to the club’s newly created revenue team, which Everton said took a “clear focus on delivering an uplift in revenue across all of the club’s commercial assets”.

“My talented colleagues in our new revenue team have made excellent progress in recent months and worked tirelessly to secure what is the biggest main partnership deal in the club’s history – I’d like to congratulate them on this achievement and, on behalf of everyone at the club, express my gratitude to Stake.com for choosing Everton as a long-term partner,” she said.

“Finally, I am pleased to say that we have already been working together with Stake.com on some exciting activities and content for our local and international supporters and we look forward to sharing more detail on these plans soon.”

Akhil Sarin, head of acquisition for Stake.com, said Everton’s ambitions mirrored those of the operator.

“We are incredibly proud to be partnering with Everton, a club steeped in tradition and with a passionate and loyal fanbase respected the world over,” Sarin said. “Everton is a club that perfectly complements our own growth ambitions as we seek to expand our presence globally and strengthen our top-tier sports sponsorship portfolio. 

“It’s a huge honour for everyone at Stake.com to be joining the Everton family and playing our part in supporting the club in the transition to the new stadium. We look forward to celebrating this most exciting chapter in the club’s history with Evertonians everywhere.”

Everton had a deal in place with sports betting operator Sportpesa from 2017 until 2020. The deal was set to last until 2022, but the club terminated it early.

Everton did not disclose the reasons behind the decision to end the partnership early, but it did say it had been taken “following a comprehensive review by the club of its commercial strategy in line with its vision and future growth plans”.

The future of front-of-shirt football sponsorships is one area under examination in the review of the 2005 Gambling Act, with many reports suggesting they may be banned following the review.

Is this an anomaly, a crash to earth for NFT prices, or the beginning of a paradigm shift in which the utility of NFTs will come into focus as brands move to practical and loyalty-driven applications for the technology? 

Who’s playing? 
There are essentially four types of “investors” who came to play in the NFT space. There are the first adopters who got in early, not unlike bitcoin investors back in 2010. These groups had no idea what the future held but believed there was intrinsic value in the assets they were acquiring. Next, you have the speculators who jumped on board in 2021 because they saw an opportunity to make money. Pure and simple. Then you have the investors who have been building a vault of NFT assets for long-term value growth. Finally, you have the masses who are coming to the realisation that the chance to buy low and sell high while making millions in the process likely had a very short window of opportunity which has now closed as evidenced by the anecdote above concerning Jack Dorsey’s NFT tweet. 

Where we are today 
Digital images of apes and kittens have sold for millions. However, we need to look at who is buying and how they got there. And is the current situation really relevant as a business model? 

There are many investors with deep pockets who came to the game in 2021 during the growth of the bubble. They saw value in being early to market in terms of acquiring NFTs and didn’t hesitate to acquire these assets at extremely high prices. 

However, there is another group who came to the party under different circumstances and we don’t hear much about them.  

If you were among the lucky group of early-stage ETH backers in the initial crowd sale, you acquired ETH for the equivalent of pennies. And for many of those who held ETH at that original price point, handing over a few of them to acquire a Bored Ape Yacht Club image takes on a different meaning than if you had acquired ETH over the past 12 months at a much higher cost. In other words, for many ETH holders, the value of the asset they are exchanging may not hold the same weight as for someone who acquitted ETH at a much higher price point. 

Unfortunately, many speculators, in the true sense of the word, acquired NFTs on platforms such as OpenSea with the sole intent of flipping them for a significant profit. A quick study of recent drops shows some buyers acquiring their assets at, say, 0.25 ETH and trying to flip them shortly thereafter for 3 ETH. And more and more we’re seeing trade secondary sales fail because of their speculative nature.    

Where are we going? 
As the early NFT bubble begins to deflate, rather than burst outright, the voice of brands looking for opportunity is getting louder. Unlike individual sales and the drive to “make a killing” by flipping NFTs, brands will be looking to create value or utility for users, customers and loyalists. 

Big brands like Asics, Coca-Cola, Taco Bell, McDonald’s and the NFL have all made moves into the NFT space. And most have been very strategic by testing the space and donating all or part of the proceeds to charitable causes. Of course, these brands have strong recognition behind them so it’s easy to understand why they are taking the early plunge into the space but even they are looking for ways to create that real value proposition for their customers. 

Lesser known brands will be faced with the challenges of identifying opportunities while determining how to create perceived and actual value with their campaigns. Brands will want to know if digital art is the only NFT application or is it truly just the first step in what will become a revolutionary shift in the way they think about and create marketing as a means of connecting with their audience, engaging them with the brand and building customer loyalty. 

How will we get there? 
NFTs go far beyond the current digital art format. They can deliver unlockable digital experiences, access to “members only” benefits and merchandise, vested ownership of physical goods, retail marketing opportunities, additional revenue streams and the simple bragging rights of owning a unique, brand-specific NFT.  

Collectors, buyers, backers, investors, advocates and admirers must see an inherent value in the assets you create. 

And the marketing tactics needed to reach these targets will require a revolutionary way of thinking. The content you create, the messaging you share, your presence on social channels and Discord, will all play a part in generating excitement about your NFT collection and the overall value you deliver to users. 

NFTs may offer the opportunity for creating long-term brand loyalty and customer advocacy like no other marketing initiative. The challenge now lies in identifying the framework for success and choosing the right path while creating the appropriate NFT assets.   

Corey Padveen is a partner at t2 Marketing International, editor-at-large for iGB and the author of Marketing to Millennials for Dummies. He is also a contributing author to Digital Marketing All-in-One for Dummies.  

Stephen Padveen has a 30+ year background developing and executing marketing strategy for some of the best known brands across the globe with clients ranging from gaming and entertainment to CPG, retail and manufacturing. His areas of expertise include traditional, online, social media and influencer marketing. 

There have been a few things most of us who have been skirting this space knew for a while – primarily, that there was and still is a lot of hype surrounding it, and that is a key ingredient for the formation (and eventual collapse) of bubbles. We also know that cryptocurrencies, blockchains and NFTs are, for a lack of better words, based on very thin ice. I do not mean to portray this as a doomsday scenario, however there is no denying that until now, as many “traditionalists” (again for the lack of a better word) claim, investing in crypto and NFTs has been closer to gambling than anything else.

This is changing somewhat, however. The recent slump in crypto, which saw huge losses across the board, not to mention the complete collapse of Luna (and its sister Terra, currently hanging on for dear life by a thread), which were meant to be stablecoins[1] (coins pegged against another asset such as fiat currency and usually backed by reserves), has given some food for thought. The discussion and analysis around the collapse of these supposedly stable sibling-coins is a very interesting one, considering that their collapse was mostly due to a deliberate attack[2].

Once we take them out of the equation and consider the bigger picture, we start noting, as has been pointed out in a few high-profile articles, including in the Financial Times[3], that “the pullback [in crypto investment] also highlighted how the performance of bitcoin and other cryptocurrencies was tightly linked with the US stock market. The correlation between bitcoin and the Nasdaq Composite, a gauge that is weighted towards US big tech companies, has reached record highs, according to data provider Kaiko.”

This is an interesting development, in my view, since it seems to (as happens so often) mirror history almost precisely to the century. It is well known that throughout the 1920s the excitement and “wild west” of Wall Street caused pretty much unchecked fluctuations, stock attacks and manipulations, and eventually led to the 1929 collapse and subsequent regulation such as the formation of the US Securities and Exchange Commission (SEC).

I think that these parallels are not to be ignored, and that in due course we will see some form of regulation coming about. This could be ultimately beneficial, and possibly even crucial for the continued success and maturation of the industry. As much as crypto purists will argue that such regulations are a betrayal of the underlying technology and concept, I tend to take a more realistic (and sometimes cynical) approach in that on a large scale, it is very tough, if not impossible, to first of all coordinate such a delicate market, and more importantly, eliminate and control bad actors.

This is a long and delicate discussion, which is best tackled in the final instalment of this article series – suffice to say, however, that as much as we would like to idealise and utopianise crypto as the saviour of the financial industry and the return to financial freedom, we can all look back at history, and realise that idealism has a higher tendency to lead to dystopia rather than utopia.

The question thus remains, where are we really at in the stage of development of NFTs? My view on this is that we are still in early days in terms of the big picture and the potential for development.

Having said this, we’ve already come a long way. We’ve already seen a bubble grow and burst (and there will be more to come); we’ve started to deal with the realities of fraud, security holes, theft[4], environmental impact and the fact that we are nowhere close to scaling the technology in the way it should be.

This could not have been clearer than the weekend of 1 May 2022, when Ethereum gas prices soared to thousands of dollars per transaction for a day[5]. It was clear that something went wrong and our first reaction was that this might be an attack on the blockchain. However, it turned out that it was due to Yuga Labs (the company behind Bored Ape Yacht Club) releasing for sale plots of land on their new metaverse, Otherside. The rush caused the blockchain to be completely overwhelmed to the point where the cost of the transaction was more expensive than the cost of the NFT itself[6].

A part of this is due to the (very) long overdue overhaul of the Ethereum blockchain (the transition to version 2) which would essentially make the shift from proof of work validation – which is computationally intensive, slow, unscalable and expensive – to proof of stake, which promises to resolve these issues, and has proven successful with sub-chains such as Polygon (which has recently increased significantly in popularity, no wonder). There is still somewhat a lack of long-term massive historical stability data to declare this methodology a solution to the issue, however it seems to be promising.

Ethereum v2 was supposed to be released a while ago, however it has been postponed several times, and is now potentially delayed until June 2023[7]. At the speed of development of the technology, this is potentially devastating for Ethereum, which has until now been the absolute leader in terms of NFT transactions.

We will, in reality, never know, or at least not for a while, how solid a foundation is being built around us – as is usual with any other technology-based infrastructure. Bad actors exist and abound, and I do believe that most people involved in the initial conception of crypto and the surrounding infrastructure never really expected to have to face the risks and challenges associated with the sheer volume of funds moving across their infrastructure – a fact that inevitably gives bad actors a very large sense of motivation to attack the system. Right now, it feels we might be underestimating the position we find ourselves in – maybe akin to a bank vault not fully understanding their weaknesses.

Do not mistake my realism for cynicism, or my suspicion for lack of excitement. I think that crypto and NFTs are going to be a very important part of our lives going forward. Being somewhat involved in this field at this stage is exhilarating, and sometimes even surreal. We are experiencing a profound change in how finance, art, access, ownership and identity are dealt with at the core. This is a change that will affect social structure and should not be underestimated.

The field of NFTs, crypto, and the metaverse (which we have barely touched on) is undergoing constant, breathtakingly fast change, and as such, any attempt at synthesising its current state with any form of completeness is futile. What we might try to do, is to attempt to project and analyse the different paths all this might take. Where might these lead us, and how might our lives change over the next few years?

This is what I would like to delve into in the final chapter of this article series. In the meantime, I do suggest keeping an eye out for activity in this space, as it is at a critical juncture, and everything can change in the blink of an eye.

Sergio Muscat is the founder of Oxygia, a boutique management consultancy specialising in strategic, operational, and human insight advisory. With several years of experience in project management, business analysis, operations, and payments among others, Oxygia assists organisations of any size and industry to investigate, manage and adapt to the future.

[1] https://time.com/nextadvisor/investing/cryptocurrency/what-are-stablecoins/

[2] https://www.livemint.com/market/cryptocurrency/what-does-the-current-crypto-crash-indicate-for-the-future-of-cryptocurrencies-11652588775930.html

[3] https://www.ft.com/content/d2a9df43-1ea0-4fb2-9b02-4944589fd909

[4] https://www.theverge.com/2022/2/20/22943228/opensea-phishing-hack-smart-contract-bug-stolen-nft

[5] https://ycharts.com/indicators/ethereum_average_gas_price

[6] https://www.fool.com/the-ascent/cryptocurrency/articles/bored-ape-yacht-club-apologizes-for-spike-in-ethereum-fees/

[7] https://www.gfinityesports.com/cryptocurrency/ethereum-2-release-date-eth2-roadmap-phases-is-ethereum-2-new-coin-serenity/

Prior to his new position Yılmaz was the managing director of the Middle East, North Africa and Turkey for cryptocurrency and digital asset investment platform Bitpanda.

“Crypto is an exciting opportunity for Paysafe whose core strengths around regulatory compliance, digital wallet infrastructure and multiple payment technologies set it up well to meet the evolving needs of its customers globally,” said Yılmaz. “I am thrilled to be joining such a talented team and playing my part in accelerating this growth.”

Yılmaz is the newest senior hire to Paysafe’s digital wallet division, which is led by digital wallet CEO Chirag Patel.

“Without doubt, the crypto market is continuing to expand rapidly and represents an important growth opportunity for Paysafe as one of the most reputable, specialised payments players in this space,” said Patel. “Against this exciting market context, the timing of Yılmaz’ appointment is perfect as more and more of our merchant and consumer customers lean on us to further ramp up our crypto payments offering.

“Yılmaz’s deep knowledge and experience of all things crypto, together with his impressive network of industry contacts, adds real strength to our existing crypto team and will enable us to continue winning in this space.”

Even as a technologist, I have, over the past years, viewed blockchain from a sceptical – and sometimes cynical – perspective. Until recently, I did not believe that there was any application of cryptocurrencies and the underlying technology that could point us into a direction of eventual ubiquity – where cryptocurrencies could be known and used by everyone, and to the point where they would become a viable replacement to fiat currencies and the ever-tightening financial ecosystem. For, in its original conceptualisation in 2009 through the pseudonymous Satoshi Nakamoto’s now-famous Bitcoin paper[1], this was indeed the fundamental aim of the proposal: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

The Bitcoin paper was a crucial turning point in that it resolved some very fundamental issues that made cryptocurrencies possible. In essence, it answered an important question in the puzzle – how would it be possible to create a completely “permissionless” and “trustless” system, whereby there is no central (or trusted) authority, such as a bank, that processes transactions? In the crypto blockchain, anyone can participate as a node, all you need (technically) would be a copy of the blockchain protocol software and computing power.

Without going into too much detail on how this is achieved, the basic concepts are those of “proof of work”, whereby nodes (or miners) would need to put in computing effort and time to compete against each other in order to validate transactions. This makes it much more difficult to forge such transactions. Mathematically, in order to have a good enough shot at taking control of a blockchain and forging a transaction, one would need to be in control of 51% of the entire computing power in the network. Furthermore, a block is not fully validated until a few other blocks are added to the chain, which means that any forger would need to retain control for a longer period of time, constantly out-performing the rest of the network to ensure they keep “winning” the mining contests for, say, at least five or six blocks into the future, which makes the probability of this happening miniscule, and more importantly, generally not worth the cost and effort. These solutions were such a critical turning point, that they essentially spurred the entire crypto development to this day.

What resulted over the following years was revolutionary, although arguably not entirely in the direction expected by the authors[2]. Cryptocurrencies, even with the advent of stable coins[3], remain a somewhat far cry from being able to satisfy all the criteria of “money”, including characteristics for being a store of value, a unit of account and a medium of exchange[4]. The crypto ecosystem, as it stands today, seems to function more on the lines of a stock exchange, rather than a full-fledged currency. While I am sure not everyone will agree with my view on this matter, it is an important point to make, since it does tie with the behaviour and evolution of non-fungible tokens.

NFTs have a short but intense history, accentuated by a background of lockdowns and a pandemic that has changed – and will continue to do so for some time – the fundamental structures of society. They ride, however, on a technology that at its fundamental, was developed in 1991[5]. It wasn’t until the advent of the Ethereum blockchain in 2015 and the concept of smart contracts, which allowed for unique tokens to be created, that the door was really and truly opened.

Before moving forward, though, it is important to touch upon the concept of a non-fungible token. I like to put it in this way. Say we have two €5 notes. They are both individually unique from a physical perspective, such as having individual serial numbers that allow us to identify each note. However, they have the exact same value and are completely interchangeable. If we exchanged our notes, we would remain in the same financial position. The parlance is that the notes, or tokens, although identifiable, are fungible. Now say, for the sake of argument, it was discovered and authenticated, that the €5 note with a specific serial number was involved in some extraordinary event, and has now taken on a new, speculative value. That note is now no longer worth €5, but whatever someone is willing to pay for it – it could be worth nothing, or millions. What we can say for sure, is that it is not like all other notes, and cannot be exchanged for its face value. This makes it non-fungible.

NFTs work on the same concept, however, unlike the physical realm whereby specific tokens, or items, need to be validated, verified, certified and so on, NFTs, being resident on the blockchain, are a certificate of themselves. Their existence is, by their own nature, a certificate of ownership. Everything that exists on the blockchain is public domain, and we can trace every single transaction on that blockchain to its origin, or genesis. NFTs are tied to smart contracts that define their behaviour, and their content is immutable once it is registered, or “minted”. The NFT, therefore, is both a container for something, and a contractual proof of itself and its ownership.

The questions still remain – why, and how did NFTs become so popular, and what, if any, will their lasting impact be on business and society in general? The latter part of the question will be tackled in future articles. As to the former, there are a few important milestones within the brief history of NFTs that are worth mentioning.

It is generally recognised that CryptoPunks[6] is the first successful implementation of a fully fledged NFT project. There were several theoretical iterations and some NFTs minted prior to this – Coloured Coins[7] (2012) were arguably the first conceptual implementation of NFTs, however the limits of the Bitcoin scripting language did not allow for full “non-fungibility”. Other projects and experiments were created between 2012 and 2017 on various blockchains, however the main spur towards the globalisation of NFTs came with the launch of the Ethereum blockchain, which improved and expanded significantly on Bitcoin by allowing for a full scripting language to be introduced, and therefore the introduction of smart contracts.

Crypto Punks’ contribution was also through the introduction (or re-introduction[8]) of the concept of “generative art”. There are 10,000 uniquely generated punks, made by combining various characteristics (hat, skin, facial hair, etc,) with some features being more common than others. These images were initially given out for free to the community, and over the years became a staple collectible, being traded for ever increasing prices. In the meantime, other projects such as CryptoKitties[9] which introduced a gamification layer to NFTs, allowing owners to both collect and breed virtual cats, were introduced.

The Covid-19 pandemic, I believe, was a major contributor to the sudden growth of NFTs. Lockdowns meant people were not able to visit physical exhibitions, and turned to the digital world, which happened to mature just in time for this. Throughout 2020 there was a slow but steady growth in NFT trading, however the real boom happened towards mid-2021. Throughout the first half of 2021, some NFTs, such as a rare Alien Punk[10], were sold for increasing amounts of money, culminating in Beeple’s “Everydays – The First 5,000 Days” being sold by Christies in a ”first of its kind” auction for a whopping $69m[11]. This was followed, inevitably, by a barrage of celebrities such as Snoop Dogg, Elon Musk and Jack Dorsey (who sold his first tweet for $2.9m) jumping onto the bandwagon, and in June/July 2021 there was a very noticeable spike in transactions[12], which in turn caused a huge blockage of the Ethereum blockchain, which was not designed to handle such transaction volume[13]. This in turn caused a spike in gas prices – the fees paid to miners – and several concerns on the environmental impact this was causing[14].

It’s not all dark and gloomy, however. New technologies such as proof-of-stake are being introduced to significantly reduce the computing power needed, increase transaction volume and reduce gas fees. There are also signs that the hype is fading. Some interpret it as a bursting bubble[15] and possibly the end of NFTs, however I think it is a process of maturation. It will, of course, have an impact. I see several analogies to the internet bubble of 2000, however this will lead to higher quality and more professional innovation, rather than a free-for-all. We are, and have been, seeing several interesting developments, and there are several open avenues to explore in front of us, not to mention new bubbles forming, such as the metaverse.

All these current and future innovations deserve more investigation and analysis, which I’ll cover in the remaining articles within this three-part series. Until then, we can only speculate what will happen in this fast-evolving environment. Within a couple of months, everything could have changed!

Sergio Muscat is the Founder of Oxygia, a boutique management consultancy specialising in strategic, operational, and human insight advisory. With several years of experience in project management, business analysis, operations, and payments among others, Oxygia assists organisations of any size and industry to investigate, manage and adapt to the future.

Sergio will be speaking on the topic of NFTs at 11:00 on Day 2 of iGB Affiliate London taking place at London’s ExCeL on 13-14 April. He will be joined on the Metaverse and NFTs: Future or bubble? panel by Noah Fischer from Gambling Apes and Betgames.tv’s Andreas Köberl. Go here to view more details of the agenda.

[1] https://bitcoin.org/bitcoin.pdf
[2] Satoshi Nakamoto is a pseudonym, and the original author/s remain unknown
[3] Stable coins are crypto currencies tied (or tethered) to the value of a fiat currency, such as USDT tethered to the value of USD. The aim is to not allow them to fluctuate wildly as other crypto currencies do purely based on trading and market conditions.
[4] https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-9-functions-of-money
[5] https://www.icaew.com/technical/technology/blockchain-and-cryptoassets/blockchain-articles/what-is-blockchain/history
[6] https://www.larvalabs.com/cryptopunks
[7] https://en.bitcoin.it/wiki/Colored_Coins
[8] Generative art was essentially introduced in the 1960s, mostly by Georg Nees, who used computers to create “paintings” by generating random or semi-random lines and circles.
[9] https://www.cryptokitties.co/
[10] https://www.coindesk.com/tech/2021/01/23/early-cryptopunk-digital-collectible-sells-for-762k-in-ether/
[11] https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million
[12] https://dune.xyz/rchen8/opensea
[13] https://www.thedechained.com/bored-ape-nfts-spike-eth-trading-on-opensea/
[14] https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change
[15] https://fortune.com/2022/03/04/nft-bubble-market-crash-price-value/

In addition to self-exclusion schemes, GamCare suggests that cryptocurrency trading and investment platforms should implement tools and strategies designed to identify and protect customers vulnerable to trading harms.

Gamstop CEO Fiona Palmer said: “Over the last three years, we have seen how effective tools like Gamstop can be for those struggling with online, regulated gambling.

“The area of cryptocurrency trading especially has experienced rapid growth and, with that, potential harm. We would be happy to discuss the area of self-exclusion with the FCA and other organisations working in this sector.” 

Gamban and Gamstop currently offer blocking software and self-exclusion tools as part of the TalkBanStop responsible gambling campaign. Gamban recently made the decision to extend its blocking software to cryptocurrency trading platforms.

Gamban CEO Jack Symons added: “Many of these products (CFDs, binary options, crypto, etc.) share a lot in common with gambling platforms; there’s no barrier to entry, they encourage over-trading and possess game-like characteristics.

“Helpline Advisors explained how helpful it would be to have something they could offer to callers desperately trying to avoid these quasi-gambling products, which made us realise adding these platforms would be beneficial both to the product and the collaborative strength of the TalkBanStop campaign.”

Multicoin Capital, Hack VC, Lightspeed Venture Partners, Sino Global Capital, Solana Ventures, and Everblue Management also participated in the round.

“We are thrilled to be backing a team with deep industry expertise to transform the sports betting experience,” FTX co-founder and chief executive Sam Bankman-Fried said. 

“It is mind-boggling that more sports wagering does not occur on exchanges – we firmly believe in giving consumers the ability and control to set their own price and are excited to partner with BetDex to bring this vision to fruition.”

Paradigm investment partner Arjun Balaji added: “It feels obvious crypto will transform online sports betting. The BetDex team has the right combination of industry experience and technical skill to create something that shows the way forward for everyone working in the space.”

BetDex, which is based in Scotland, launched last month with the aim of delivering a “global sports betting protocol that enables users to trade bets at high speed and minimal cost with zero counterparty risk”. 

Its platform is due to launch for customers during the first half of 2022, and aims to marry cryptocurrency with sports, branding itself as the first decentralised sports betting exchange in the market.

Eccles, who left FanDuel four years ago, is serving as non-executive chair of BetDex, having co-founded the platform with Varun Sudhakar and Stuart Tonner. Sudhakar has been named chief executive and Tonner chief technology officer.

“Blockchain technology is set to revolutionise sports betting and we want to be at the forefront of that,” Eccles said. “It’s exciting to be founding the business with Varun and Stuart, and to be building it in Scotland. 

“We are energised to have the backing and wealth of expertise that comes with having Paradigm and FTX as cornerstone investors.”

The show is set to include more than 550 exhibitors from at least 116 countries.

ICE London will be making its return in 2022, after the 2021 edition was postponed due to the novel coronavirus (Covid-19) pandemic.

Alex Pratt, group managing director at Clarion Gaming, said it was “obviously hugely encouraging to at last be able to talk about the return of in-person events”.

“Not only is ICE London physically the biggest gaming event in the world and one of only two annual shows to occupy all of ExCeL, but it is also a perfect opportunity to see the entire global industry in one place, a unique characteristic which is reflected in the breadth of the ICE visitor base which stretches across all continents.”

Pratt also noted that ICE serves the entire gaming industry, making it an essential event on the gaming calendar.

“ICE exists for everyone who is involved in every aspect of the gambling industry supply chain from games creators, to distributors, operators, retailers, trade associations, strategic bodies and regulators,” he continued. “Successfully bringing together so many innovators from throughout the world has resulted in ICE being described as a ‘billion dollars-worth of thinking all in one place’ and for most industry professionals it’s one of those ‘not to be missed’ events that they make a huge effort to be a part of each and every year.”

Registration for the event opening follows the success of Clarion’s iGB Live! And iGB Affiliate Amsterdam last week in Amsterdam. Data published before the show revealed that 78% of attendees to both events were decision-makers within their respective organisations, according to registration data.

“The Clarion Gaming team has just returned from organising the successful iGB Live! in the Netherlands and we now move into the business end of preparations for ICE London which I believe will be a passionate and heart-felt celebration of the international industry and its future,” Pratt added.

ICE London will take place alongside the co-located iGB Affiliate London, which will begin on 3 February and end on 5 February.

Click here to book your place.