The billion-dollar offshore sports betting market that serves the U.S. is moving forward with Bitcoin.
Online sportsbook 5Dimes.eu, one of the most prominent U.S.-facing shops, announced last week that it is beginning to accept bitcoin, the controversial virtual currency that attracts gamblers with quick, cheap and anonymous transactions. While there are several smaller bitcoin-only books serving the U.S., 5Dimes is by far the biggest brand to begin accepting bitcoin. The decision was prompted by customer requests, said 5Dimes bookmanager Tony Williams last week in an online chat with BettingTalk.com
“Bitcoins were the most requested option that was not offered,” Williams said. “If our clients want a wagering option or a processing option, we find a way to give it to them.”
(You can read the entire chat transcription below).
5Dimes is accepting a limited number of customers for a bitcoin deposit beta group. All bitcoin deposits will be converted to U.S. dollars immediately, using the average bid and ask prices from www.bitstamp.net. There are no fees on bitcoin deposits or redemptions, which are completed on the same day, the sportsbook said. The book added that the availability of bitcoins for redemption is not guaranteed, and alternate payout methods may incur a fee. Fees for more traditional withdrawal methods at 5Dimes range from $15 to $80 and can take days, if not longer, to be completed.
Other prominent online sportsbooks said they are monitoring Bitcoin, but were not ready to start accepting it yet. Kevin Bradley, bookmanager for online book Bovada.lv, told BettingTalk.com in June that, “Bitcoin is something that is being explored, but is still relatively new.”
In a January Q&A on twitter, the head of Pinnaclesports.com’s book said, “I am a close follower of Bitcoin, but we won’t accept BTC until legal aspects of the currency have been clarified #Pinnacle”
In the meantime, 5Dimes is taking the lead, and that’s big news for some U.S. bettors, who are already active in the Bitcoin sports betting market and craving more betting options.
“I think 5Dimes doing this is a huge deal,” said a bitcoin bettor who is responsible for software strategy at a large tech firm and asked to be referred only by his twitter handle, @ZonaCats1. “It further legitimizes Bitcoin, especially in the sports betting industry.”
There are currently a handful of bitcoin-only online books serving U.S.-based sports bettors. But 5Dimes is the biggest name and offers a much more extensive betting menu than smaller sites. The volatility of the value of bitcoins is an often-mentioned concern.
“The chance of loss based on price fluctuations is offset by the savings in processing costs,” said Williams. “I think the processing cost savings outweigh any short or long term price fluctuations.
The immediacy of transactions, both deposits and withdrawals, is a big attraction to U.S.-based online sports bettors, who have found it more and more difficult to play offshore.
In 2006, the U.S. passed the Unlawful Internet Gambling Enforcement Act, which “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the uses of the internet and that is unlawful under any federal or state law.” The legislation was tacked on the SAFE Port Act in an under-the-radar move that drew heavy criticism. Professor I. Nelson Rose, an expert in gaming law, wrote in 2006 that no one on the Senate-House Conference Committee had even seen the final language of the bill, before it was passed.
Nevertheless, UIGEA has made things more complicated for both offshore books and U.S.-based bettors. Costly transaction fees and unreliable payout times are common complaints. But some believe bitcoin could be the answer. At a minimum, it should be quicker. On a video chat, @ZonaCats1 showed that it took only minutes to withdraw from a bitcoin sportsbook, convert the bitcoins to U.S. dollars and transfer it into his bank account.
Bitcoin is already widely popular in the worldwide online gambling market. Studies have shown that 50-60 percent of bitcoin transactions in 2013 took place on gambling sites.
Approximately $3.6 billion was wagered at Nevada sports books in 2013. The American Gaming Association says that amount is less than 1 percent of the total amount wagered on sports in the U.S. The National Gambling Impact Study Commission estimated that as much as $380 billion is illegally bet on sports annually, but tracking an unregulated industry, which mostly operates out of the Caribbean, isn’t easy.
However, the U.S. Dept. of Justice and the major sports leagues aren’t interested in regulation at this point. That means hundreds of billions of dollars will continue to be bet offshore, untaxed and unregulated. And it seems more and more likely that a lot of it will be done via bitcoin in the future.
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Q&A with 5Dimes.eu bookmanager Tony Williams
BettingTalk.com: From the book’s point of view, what are the advantages of Bitcoin?
Tony: Quick processing of both deposits and payouts at little or no cost.
BettingTalk.com: There have been a lot of bitcoin-only online books pop up. But, to the best of my knowledge, you’re the first of the “mainstream” sites to jump into the bitcoin world. What prompted you to take the leap? Had there been a lot of requests for you to accept bitcoin?
Tony: When it comes to deposit and payout options, we have more than anyone else. Bitcoins were the most requested option that was not offered. If our clients want a wagering option or a processing option, we find a way to give it to them.
BettingTalk.com: How much of a concern is the fluctuating value of bitcoin?
Tony: The chance of loss based on price fluctuations is offset by the savings in processing costs. I think the processing cost savings outweigh any short or long term price fluctuations.
BettingTalk.com: Do you believe bitcoin will be the predominant currency used in online gaming in the near future?
Tony: We’re a long way from the word “predominant” being associated with this method. Many clients don’t want to have to worry about price fluctuations or currency conversions.
BettingTalk.com: How long is the Beta test expected to last and when do you expect to be fully operational in terms of accepting/paying out in bitcoin?
Tony: We have no set timetable on when the Beta test will complete. Clients are still being accepted into the Beta program. As long as there are no major issues with the method, we will continue to allow the Beta testing pool to grow.