Summary
- Despite the questionable legal status of crypto casinos, players continue to spend billions on them.
- Top cryptocurrency casinos are now competing with major gambling groups in terms of total revenue.
- Many players are finding ways to bypass state-imposed restrictions to access crypto casinos.
Cryptocurrency casinos face a precarious legal status globally. In major regions such as the United States, Australia, New Zealand, Canada, and the United Kingdom, these casinos are either officially banned or operate without regulation.
Crypto casinos rake in billions unperturbed by unclear legal status
Despite facing legal and regulatory challenges, crypto casinos have soared in popularity, amassing more than $81.4 billion in gross gaming revenue (GGR) in 2024, according to a recent survey by Yield Sec. This online company, which focuses on crime in the sector, initially shared these findings through The Financial Times. The report from Yield Sec clarifies that GGR reflects the difference between total player stakes and the winnings paid out. This sector's GGR has grown fivefold since 2022. Yield Sec’s exploration of the crypto casino landscape highlighted well-defined industry leaders. Notably, Stake managed to generate $4.7 billion in GGR in 2024 alone, marking an 80% increase since 2022, demonstrating its rising popularity and global influence. To put this in context, Stake's GGR is comparable to traditional gaming giant Entain, which reported a $5 billion GGR in 2024. Stake has been proactive in acquiring licenses to operate in major jurisdictions, including the United Kingdom and Brazil, although it withdrew from the UK in 2024. To comply with local regulations, Stake revamped its operations in certain areas, transforming them into fiat-currency-focused gambling platforms, such as in Brazil's iGaming market. However, most crypto casinos have been hesitant to follow this path. They prefer to operate internationally, offering their services without obtaining licenses in every territory where they are available.
Barriers erected by regulators are torn down by player ingenuity
As a result, many have faced fines, but with limited enforcement options, operators have mostly avoided consequences. Apart from potentially blocking websites, regulators have generally been left without results. Even blocking websites can be unlawful in certain situations, as recently seen in Germany. Meanwhile, users facing minor restrictions have quickly adopted a new trend—using VPNs to bypass barriers and continue playing. The Netherlands Gambling Authority has accused numerous websites of enabling Dutch players to access their platforms through VPNs. The Yield Sec report highlights the enduring and growing prominence of crypto casinos. However, the reality is that most of these crypto casinos are not regulated and are unlikely to be soon.
Why are crypto casinos surging
I believe there are multiple reasons at play, but one significant factor is the lack of KYC/AML procedures in crypto casinos. Recently, we discussed how age demographics might impact the future of these casinos. In my view, the absence of formal identity checks attracts some users, particularly those who face challenges depositing funds into regulated casinos due to requirements for proof of funds. For others, the choice is driven by economic conditions. In countries experiencing hyperinflation, cryptocurrencies or foreign currencies, which can be difficult to obtain, often serve as the only viable way to preserve value. This highlights the financial and economic reasons behind choosing crypto casinos over traditional ones. Novota notes that some players are also turning to crypto casinos to escape overly restrictive domestic markets. These markets push more players towards offshore options due to dissatisfaction with the regulated offerings at home. For example, in Germany, strict regulations make traditional online gambling frustrating or even inaccessible. Crypto casinos, in contrast, are harder for governments to block, making them an attractive alternative. However, this trend is not solely about rebelling against a regulated market. There's also a growing understanding of cryptocurrencies and their use in leisure activities like online gambling. As Novota explains, the perceived stability of cryptocurrencies has increased. Five years ago, many viewed crypto as a high-risk asset. Yet, as cryptocurrencies continue to exist without major collapses, they gain more trust from the general public. This insight helps explain Yield Sec's latest projections for the gross gaming revenue produced by crypto casinos in 2024.
