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A group of UK-based researchers examining cryptocurrency gambling sites found none that verified the identities of new players, and 35 percent asked for only an email but no personal information.
The lack of ID verification, plus the additional level of anonymity provided by cryptocurrency, suggests that to protect youth and the vulnerable, cryptocurrency gambling operators should be prevented from sponsoring professional sports, the researchers said.
A cryptocurrency gambling operator, Stake.com, sponsors English Premier League football clubs Everton and Watford, although UK gamblers can only access Stake through a white-label arrangement that does not allow cryptocurrency payments.
It also sponsors the European Cricket Championships.
In the study, which appeared in the Psychology of Addictive Behaviors, the researchers reviewed 40 sites accessible from the UK.
Almost two-thirds of the crypto gambling sites continued to email promotional material, even after being informed that the gambler had impaired control over their habit, the researchers wrote.
One of the researchers pointed out another problem associated with cryptocurrency gambling.
“Merely purchasing and holding onto cryptocurrency (potentially with the intention to gamble with it) is inherently risky due to price volatility, which is an additional concern that traditional gambling participants would not need to deal with.” said Leon Xiao.
The volatility means a double risk for cryptocurrency gamblers — any wins and losses from gambling “can be magnified by the intrinsic volatility of the underlying cryptocurrency”, the researchers said.
“If this report is true, then it should be a real concern not only for the regulator involved but also for the trust and sustainability of the gambling sector as a whole and in particular for this emerging segment of a sector already high on the radar of regulators, politicians, and the media,” said Peter Murray, head of gaming at Veriff, an ID verification software company.
The study found that less than half of the sites had verifiable licences and, of those, 17 were from Curaçao and one each from the Isle of Man, and Antigua and Barbuda.
None of the UK-accessible sites had a UK gambling licence.
Other sites claimed to have licences, but either the digital certificate was invalid or the operator claimed to be licensed but no certification was provided, the researchers said.
About 38 percent of the operators offered no safer gambling tools such as deposit limits or access to gambling filtering tools, and a further 20 percent offered only one, the academics said.
Most asked for a date of birth, but none required verification, according to the researchers.
Two of the websites allowed registration with a fictitious birthdate that was under 18 years.
Most of the sites offered warnings about problem gambling, but most also included material about gambling being fun or a way to win large amounts of money.
“Yes, there is a chance of winning vast amounts of money but, if not treated as entertainment only and nothing more, irresponsible gaming can have dire consequences for the player,” one site said.
The researchers identified additional red flags around cryptocurrency gambling, revolving around the complete lack of identity verification at the deposit stage.
Regulators can at least attempt to block gambling payments, but the anonymous nature of cryptocurrencies means blocking illegal gambling is even more of a struggle, the researchers said.
Although conventional black-market gambling involves some level of identification through the payment processor, cryptocurrency adds an additional level of anonymity, the academics wrote.
The researchers found nearly 500 cryptocurrency gambling sites in English, 237 of which claimed to be accessible from the UK. They examined 40 of the most visited sites.
As of July, the UK Gambling Commission said it had no operators that accepted cryptocurrency as payment.
The Malta Gaming Authority has two “sandbox” crypto licences that expire at the end of the year, and the authority is revamping its licensing system for 2023.
The researchers were: Maira Andrade of the University of East London; Steve Sharman of King’s College London; Leon Y. Xiao of IT University of Copenhagen and Queen Mary University; and Philip Newall of the University of Bristol.
