You Ask - We Explain: "Sandboxes" & Cryptocurrency Gambling

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by Dave Brown
MGA and Cryptocurrency Gambling

Cryptocurrency gambling has considerably evolved in the last few years in an environment where Bitcoin transactions are gaining more and more popularity by the day. An important factor in this development is the work by The Malta Gaming Authority. They work specifically towards the purpose to introduce cryptocurrency as a payment method for the hundreds of web casinos in its jurisdiction. The project is called "The Sandbox Framework" and is further explained below. The condition is for the cryptocurrency wallets used by players to make their deposits or withdrawals to be fully registered. This would eliminate the challenges mentioned earlier and turn crypto gaming into safe and more transparent practice.

The legalization of sports betting in the US has also led to an increase in operators' interest in terms of cryptocurrency payments. Other operators in other parts of the world are also expressing their interest in this alternative and expert platforms online are reviewing the most trustworthy Bitcoin and cryptocurrency casinos on the web periodically.

Gaming and lotteries have also started to flourish and the anonymity factor combined with simplified banking management are two reasons why gamblers and operators are making the switch from classic fiat currencies to the revolutionary cryptocurrency.

The online gambling market alone is anticipated to reach USD 73.45 billion by 2024. Some casinos have started to exclusively use cryptocurrency as a unique payment solution. Others allow players to choose the alternative of Bitcoin and other cryptocurrencies to the detriment of traditional or fiat currencies. 

What is a cryptocurrency or bitcoin casino?

When we talk about "cryptocurrency casinos" we often refer to a Bitcoin casino as this currently is the most common cryptocurrency used at online casinos. It basically means that the gaming site is set up to accept cryptocurrencies like Bitcoin as a unique payment option or alongside fiat currencies such as Australian Dollars, Euros or American Dollars. At the moment, there are several large Bitcoin casinos that host customized game libraries and specific services for players interested in transacting Bitcoin instead of other fiat currency.

These casinos provide regular casino gaming options like roulette and poker, along with sports betting, lottery games and even spread betting. The term Bitcoin (BTC) is oftentimes replaced with millibitcoin (mBTC) which refers to one-thousandth of a Bitcoin (0.001 BTC).

How does a cryptocurrency casino run?

Bitcoin casinos are driven by their software, with most venues running their own gaming software. Smaller casinos choose to buy or rent Bitcoin casino software that can be fully customized. The respective software runs the games and asks for zero or minimum intervention from human operators. One particular drawback here is the fact that a Bitcoin casino will usually have a difficult time establishing trust given the full digitalization of all of its services. One solution is for the casinos to disclose the way their software algorithms work. Gambler references can also prove useful, along with the casinos providing unique offers in terms of games.

Why should gamblers choose to gamble with these types of currencies?

  • Bitcoin casinos accept all global players from all parts of the world, nonstop, thanks to the digital nature of their operations.

  • All transactions and accounts remain anonymous, which is probably the strongest argument that supports this form of gambling. The enhanced privacy factor is undeniably advantageous, especially for players who would like to leave the centralized banking system behind and use their money as they please, with no one interfering or knowing what they are doing.

  • No transaction fees to worry about, on top of unlimited and free transactions on a daily basis. Bitcoin appears to be the ideal currency for making online transactions. All transfers are entirely safe, anonymous and irreversible. Bitcoin can be stored in a virtual wallet that is safer than credit cards used for making a deposit. No need to worry about potential hackers stealing your information.

  • While not legal, lots of Bitcoin casinos have customized some of the rules of the traditional games players are used to. The added excitement and curiosity draws more players in periodically.

Why are cryptocurrency casinos sometimes frowned upon?

Some people argue that these casinos lack the traditional regulations that non-Bitcoin casinos have. Fiat currency payments allow operators to easily track and identify individual players; dealers and casino operators can also be identified by the regulating bodies in each country. However, Bitcoin casinos do not work in a similar way. Given the fact that all transactions are digital, auditing is a hassle and the same goes for ensuring that online card games have their cards shuffled and distributed in a fair manner.

Players who remain anonymous since they wager using anonymous digital currency further contribute to making operations even more questionable.most of these venues solely require new players to choose a username and a password to complete registration. No location or age-verification is underway, which means minors in countries where gambling is outlawed could be wagering online.

What's in the future of cryptocurrency gambling?

  • The Malta Gambling Authority has initiated Phase 2 of the Sandbox Framework project

  • The Maltese Digital Innovation Authority has started auditing casino operators that have applied for a license

  • U.S. Sports betting regulators examine the possibility to use cryptocurrency on sports betting platforms

The Malta Gaming Authority presented its Sandbox Framework at the first Delta Summit in the country between 3 and 5 October 2018. The framework targets the introduction of blockchain technologies and cryptocurrency as payments in the online gambling environment and it consists of two main phases. The Sandbox test was planned in order to determine whether the program will be running flawlessly, as well as to ensure its full security. At the end of the process, the Gaming Authority in Malta will decide whether to accept and include cryptocurrency as new payment solutions for online casino operators.

The Background: The Sandbox Framework - Phase one completed

Phase one was announced to start in the second quarter of 2018, with the trial planned to run for six months. MGA asked shareholders to bring their own opinions to the table prior to the start of phase one, by April 30, 2018. During the testing phase, the MGA assessed “token” operators and determined if they can accurately verify the wallet addresses of players in order to accept cryptocurrency payments in the casinos they run. In order for payments to be accepted, the wallets need to be connected to a registered player account. Withdrawals that are connected to a wallet that has not been registered should be denied. The MGA mentioned the existence of some “rare exceptions” to this rule, but, overall, players are asked to show proof of a cryptocurrency account that has been registered with a valid wallet address to make sure all transactions are legal.

Phase Two - Has been initiated 

Phase two of the Sandbox Framework was initiated on the 1st of January 2019 and it targets the use of Distributed Ledger technology along with Virtual Financial Assets (VFAs), Virtual Tokens (VTs) and Innovative Technology Arrangements (ITAs) for processing all casino transactions online. The success of this testing phase would ensure additional tests during the second phase of the framework.

The testing will assess the use of blockchain assets in a fully-controlled environment and enable the MGA to determine the potential complications that could prove to be risky for both operators and customers. Authorities in Malta are trying to analyze this process even further and expand the research and testing on non-gambling operators, interested companies in other fields and even Malta's economy.

Businesses that would like to be a part of the second testing phase are welcomed to apply using the MGA portal, after reading the latest version of the Licensee Relationship Management System. Operators will be asked to offer details on all of their cryptocurrency-based financial transactions, as well as log in all the data into the LRMS portal for the testing phase.

Phase 2 of the Sandbox project aims to initiate the use of license applications instead of simply calculating how effective these transactions would be in a real-world environment. Australia and other gambling jurisdictions have already embraced cryptocurrency gambling as a fast and safe way handling casino banking payments online and other operators have expressed their desire to use VFAs and DLTs when completing their operations.

Phase 2 will continue until October the 10th; however, watchdogs can decide to extend the process for an indefinite period of time, until the results will be revealing and satisfying enough. The MGA's real struggle is to successfully expand the industry encompassing all businesses and customers while completing tests in real-world settings that should. The second phase will also assess the recommendations issued by industry operators.

The country is already one of the biggest online casino regulators on the planet, with lots of casinos having moved offshore to escape big taxes while benefiting from a trustworthy regulator that would keep them effectively licensed and regulated. MGA focuses on allowing casino operators to make use of new payment methods as well as enhanced security solutions.

The Sandbox Framework promises to accomplish these exact goals, while potentially boosting Malta's GDP by 12%.

What Should Casino Operators Expect From The Sandbox Framework

While cryptocurrency control is rather difficult to achieve at the moment, the MGA thinks this payment solution can help financial transactions be completed faster and more transparent.

This should ensure more peace of mind for operators and players alike.

As a player at online casinos you will notice that more and more of the regular sites have cryptocurrency options. By playing at one of the sites we have reviewed and can recommend you can trust to meet the latest gaming technology! 

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