Gambling operators must have more dialogue with authorities about the unique regulatory problems cryptocurrencies can address in their jurisdictions if the payment method is to be widely accepted anytime in the near future, according to a panel of experts.
Speaking at SBC’s Betting on Sports Europe conference on Wednesday, David Kicks, the CEO and co-founder of E-Technologies Global, warned that cryptocurrency adoption still only really exists in unregulated and grey markets.
“In the regulated markets in Europe, with the development of open banking and crypto becoming largely a speculative asset, there has not been a compulsion to use them as initially envisaged,” Kicks said.
A small number of high-end VIP players in markets around the world are already starting to migrate to cryptocurrencies for deposits, according to Kicks, due to limits and barriers they face when depositing large amounts of money on a frequent basis.
Non-fungible tokens (NFTs) and crypto have been flagged for creating new opportunities for fraud, which is a primary reason many regulators are slow or deterred from regulating its acceptance.
However, Christian Reinheimer, the director of payments product and tech at LeoVegas, said regulators should actually see these new technologies as tools to solve existing problems, as opposed to exacerbating them, as well as a key to strengthening consumer protection.
“There are plenty of use cases in regulated European markets [for crypto] but there are also some downfalls when it comes to the current European banking system. For instance, bank-based deposits still require a risk-based approach,” said Reinheimer.
George Moschetas, director of product accounts and services at Kaizen Gaming, explained that in Greece crypto is a “no go” for gambling until the central banks regulate it, an issue he believes is mirrored in many other jurisdictions.
“All stakeholders involved in this want to improve anti-money laundering (AML) controls and know your customer (KYC) functions. If we can show regulators we can do that with these new technologies then we will start to see progress. It's the responsibility of the operators to pave the way for the market,” Moschetas said.
Since the introduction of COVID-19 restrictions, Greeks can now access online services to identify themselves across all public services through a kind of digital ID, whereas in the past they were required to register in person. Businesses such as Kaizen are looking at how they can piggyback on these developments.
Outside Europe, there are some jurisdictions where regulators are already engaging meaningfully with industry stakeholders, with several panellists throughout the day specifically mentioning Ontario.
According to speakers, after the recent launch of the online gambling market in Ontario, some operators were finding transactions to them being blocked by banks.
Following discussions between the Alcohol and Gaming Commission of Ontario (ACGO) and licensed operators, the regulator talked to the banks and resolved the issue.
“We must have intent from the regulator's side. In Ontario they want it to be a thriving industry and that makes everything easier. The standard of the regulator makes a big difference,” Moschetas said.
Germany was cited as a complete contrast by both Reinheimer and Ai Ishii, business development staffer at nChain, on a separate panel later in the day.
“The availability of payments technology is not even there in Germany due to the state of digitalisation, there is no digital ID for instance. There must be an adjustment to the willingness for dialogue and technologies that can be leveraged in the market. Something like a bank ID in Germany would make things a lot easier but I don't see these things happening there for a while,” Reinheimer said.