Bitcoin sports betting represents a new frontier in the iGaming industry, bringing together the numerous advantages provided by blockchain technology and an ever-increasing interest in sports betting to forge a promising new sector.
Business owners eager to remain flexible and stay abreast of new technologies might find it challenging to uncover all the details related to Bitcoin sports betting. In this comprehensive guide, Casinnovate will cover all the aspects you need to know to navigate this market.
How Traditional Sports Betting Differs From Bitcoin Sports Betting
There are several differences between traditional online sports betting and Bitcoin sports betting:
The Currency Used
While traditional sports betting allows players to place bets using fiat currencies, Bitcoin sports betting operates with the first cryptocurrency by market capitalization—BTC.
This distinction has several consequences:
- Players, as well as operators, should take into account the higher volatility of an asset like Bitcoin compared to fiat currencies.
- Financial transactions are managed through decentralized blockchain technology, not by banks—a topic we will delve into later.
Bonuses, Promotions and Odds
While blockchain technology and crypto-based platforms are becoming increasingly popular, they are not as commonly used as traditional sports betting platforms. A cause and consequence of this is that players may not find as many options for promotions and odds as they would on a traditional platform.
Legal Requirements
Utilizing Bitcoin, as well as blockchain technology and cryptocurrencies in general, requires extra attention to legal requirements. The regulatory framework surrounding the use of cryptocurrencies remains ambiguous, and countries vary significantly in their attitude towards digital assets.
Operators need to be cognizant of this in order to make informed decisions, particularly concerning the markets in which they choose to operate.
Table – Sports Betting Market Data
| Key Data | Details |
|---|---|
| Sports Betting Revenue (Q1 2023) | $2.8 billion (70% increase YoY) |
| Sports Betting Stocks Performance | 6.7% gain (compared to Russell 1000 Index’s 7% return) |
| Top Sports Betting Stocks (Value) | Light & Wonder Inc., PENN Entertainment Inc., MGM Resorts International |
| Top Sports Betting Stocks (Growth) | PENN Entertainment Inc., Churchill Downs Inc., VICI Properties Inc. |
| Top Sports Betting Stocks (Momentum) | NeoGames SA, Melco Resorts and Entertainment Ltd, DraftKings Inc |
| Sports Betting Legalization | Legalized in 36 U.S. states (26 allow online sports gambling) |
| Global Sports Betting Market Forecast | Expected to grow at over 10% CAGR to reach $182 billion by 2030 |
| U.S. Sportsbook Taxes | States like Illinois and New Jersey surpassed $1 billion; Federal level generated $953 million from online sportsbooks |
| Risks | Regulatory status and potential pushback from public health advocates |
Source: Investopedia
Understanding Bitcoin Sports Betting
Now that we have outlined the main differences between traditional online sports betting and Bitcoin sports betting, it’s time to explore how this type of sports betting actually works.
Mechanics
From a technical perspective, a Bitcoin sports betting platform doesn’t operate very differently from a traditional sports betting platform. The primary distinction lies in the payment method; the former utilizes Bitcoin.
Operators opting for Bitcoin as a payment option generally have two alternative solutions for providing BTC as a deposit and withdrawal method:
- Integrating a payment provider capable of handling Bitcoin wallets for your iGaming business.
- Creating separate wallets for users upon registration.
Transparency
Furthermore, adopting such solutions enables operators to offer their customers more transparent options for financial transactions. In fact, all transactions that occur on the blockchain are publicly visible, though the details of each customer are protected by public addresses.
This point, in particular, contributes to enhanced anonymity. Additionally, the immutability and tamper-evidence of the underlying technology render these payment solutions more secure and less susceptible to control by centralized authorities.
No boundaries
Despite the fact that business owners must know and comply with relevant regulatory frameworks and legalities, blockchain technology itself does not have any geographical boundaries.
In fact, cryptocurrencies can facilitate cross-border and national transactions as long as users have an internet connection and a crypto wallet that supports Bitcoin.
Setting Up a Bitcoin Sports Betting Platform
Even if a Bitcoin platform can seem something very different, theere are elements that work for any type of business. In fact, iGaming entrepreneurs aspiring to establish a Bitcoin sportsbook platform, need to base their approach on two main principles – as any other business owner: wise planning and the reliability of the chosen partners.
Choosing the Right Software Provider
Building on the importance of reliable partnerships, it’s essential to consider the role of B2B iGaming software providers in the setup of your Bitcoin sportsbook platform. Among the top names in the industry, some are already adept at handling operations and financial transactions using blockchain technology and cryptocurrencies.
While selecting the sportsbook software provider that best fits your needs, you can find different options. Among the most common in the iGaming industry we can find solutions that offer different levels of customization and intuitiveness—like white labeling or turnkey solutions.
Integrating Bitcoin Payments
Transitioning from the selection of a software provider, integrating Bitcoin payments stands out as a crucial step, ultimately defining the nature of your sportsbook platform. As previously mentioned, entrepreneurs have mainly two alternatives when it comes to integrating crypto payments:
- Utilizing third-party services,
- Directly managing crypto wallets on behalf of the users.
Each of these alternatives comes with its own set of pros and cons:
Casinnovate – Alternatives to Integrate Bitcoin payments into your sports betting platform
| Criteria | Payment Provider | Creating Crypto Wallets |
|---|---|---|
| Advantages | ||
| Ease of Integration | – Simplified integration through APIs. – Quick setup and implementation. | – Direct control over the user experience and transaction process. |
| Security | – Security measures handled by the provider. – Potential for established and robust security protocols. | – Full control over security measures and protocols. |
| Regulatory Compliance | – Compliance handled by the provider. – Reduced legal and regulatory burden on the platform. | – Ability to tailor compliance measures to specific needs and jurisdictions. |
| Conversion to Fiat | – Immediate conversion to fiat to avoid volatility. – Simplified financial management. | – Option to offer direct crypto-to-crypto transactions. |
| Disadvantages | ||
| Control | – Limited control over the transaction process. – Dependence on the provider’s stability and reliability. | – Increased responsibility for transaction security and user funds. |
| Security and Compliance Risks | – Potential exposure to third-party risks. – Reliance on provider’s security measures. | – Full responsibility for implementing and maintaining security and compliance measures. |
| Complexity | – May be subject to provider’s limitations and restrictions. | – Need for in-house expertise to manage wallets and transactions. – Potential complexity in implementation. |
| Exposure to Volatility | – Limited exposure to Bitcoin’s price volatility (if converting to fiat). | – Potential exposure to Bitcoin’s price volatility if not converting to fiat immediately. |
Considering the pros and cons of both alternatives can help iGaming entrepreneurs evaluate which option best fits their needs and goals.
Obtaining the Necessary Licenses
Another pivotal point in establishing a Bitcoin sportsbook platform is obtaining the necessary licenses. As previously mentioned, cryptocurrencies are not universally recognized as legitimate assets. In this context, partnering with a third-party payment provider and software provider can simplify the process.
However, before finalizing any partnerships, it is crucial to evaluate the markets you intend to operate in.
Operators who adopt cryptocurrencies as a payment method, as well as those who base their casinos on blockchain technology, might find it advantageous to target crypto-friendly countries. This decision regarding market selection naturally segues into our next point of discussion.
Marketing and Attracting Users
Every business requires a robust marketing strategy, and this task can become particularly challenging for online businesses that utilize cryptocurrencies. Despite Bitcoin’s status as the leading cryptocurrency by market capitalization, it is an undeniable fact that not all internet users are ready or willing to adopt cryptocurrencies. The major reasons behind this kind of distrust include the relatively young age of these currencies, their volatility, and their occasional association with scams.
Precisely because of these challenges, it becomes crucial for an iGaming entrepreneur to clearly articulate the reasons for offering their users a cryptocurrency option—be it for enhanced transparency, additional security, or reduced centralization. Clarity in your intentions is key to building trust and establishing credibility.
Furthermore, the choice of a marketing strategy tailored to the unique needs of your business lies in the hands of the entrepreneur. This includes deciding whether to target only bettors already familiar with Bitcoin or to aim for a broader audience. Employing content marketing and SEO best practices can help promote your platform at little to no cost. However, it is also advisable to allocate a portion of your capital to paid strategies and seek collaboration with professionals to effectively reach your future users.
Future Trends and Innovations
Bitcoin sports betting platforms already represent an innovative approach to managing your iGaming business. Nevertheless, looking ahead, there are emerging trends that developers, users, and entrepreneurs are actively pursuing. A prominent trend anticipated in the future revolves around the utilization of smart contracts to automate a significant portion of management tasks, further enhancing security and transparency.
Smart contracts are self-executing contracts that operate based on predetermined conditions, functioning atomically—meaning a contract only executes when all required conditions are met.
Despite Bitcoin’s initial design not supporting this type of blockchain-based contract, innovative solutions are in development to extend the availability of smart contracts to Bitcoin users.
Why smart contracts can become the new trend in Bitcoin sports betting?
Smart contracts present a transformative opportunity for operators in the Bitcoin sports betting industry, offering enhanced security, transparency, and decentralization to users.
These contracts enable the autonomous management of backend operations once conditions are set, significantly reducing the need for human intervention—often limited to updating and auditing contracts to meet the evolving needs of the platform.
Additionally, smart contracts bring an added layer of transparency, as all transactions can be verified on blockchain public explorers to ensure the contract is functioning correctly. This feature is particularly crucial in the world of sports betting, where trust and transparency are paramount.
Furthermore, smart contracts can automate the handling of bets, including the enforcement of rules coded to guarantee complete randomness in the outcome, as well as faster payments.
Bitcoin and smart contracts
Since Bitcoin wasn’t initially designed to support smart contracts, developers and blockchain companies are finding new ways to allow this blockchain to support them. Among these solutions we can list:
- Firstly, Layer 2 solutions: these solutions consist of protocols based on existing blockchains. The Lightning Network is an example of a Layer 2 solution built on the Bitcoin blockchain, capable of enabling faster transactions and supporting smart contract capabilities.
- Secondly, Wrapped Bitcoin (WBTC): for those operators interested in the flexibility of the Ethereum blockchain without giving up on the popularity of Bitcoin, WBTC might be a solution. This Ethereum token is pegged to Bitcoin.
- Secondly, Wrapped Bitcoin (WBTC): for those operators interested in the flexibility of the Ethereum blockchain without giving up on the popularity of Bitcoin, WBTC might be a solution. This Ethereum token is pegged to Bitcoin.
By exploring these solutions, Bitcoin sports betting platforms can integrate smart contracts into their operations. This would help them to automate their businesses, and to provide users with automated payouts, provably fair betting, and a more interactive and secure experience. As the technology continues to evolve, we can expect an increasing number of platforms adopting these solutions. This could lead to a new era in online sports betting.
Conclusion
Bitcoin sports betting is not only an alternative method for deposits and withdrawals, but it also a way to provode a more transparent betting experience.
Security, transparency, and transaction speed are continually being enhanced by developers, blockchain businesses, and protocols dedicated to enabling smart contract integration and interoperability.
Despite the seemingly limitless progress in iGaming technology, it’s always up to you. Each entrepreneur should make choices tailored to meet the specific needs and goals of their business.
To establish a clear roadmap and gain insights from iGaming experts, take advantage of Casinnovate’s free business plan and stay connected with the industry’s professionals.
FAQs
Integrating Bitcoin enhances transaction speed, improves security, reduces fees, and attracts a new user demographic, boosting both profitability and market reach.
Bitcoin’s price fluctuations can affect bet values. Implementing real-time conversion to a stable currency upon deposit can mitigate this risk, ensuring consistent bet values.
Ensure compliance with varying cryptocurrency regulations, obtain necessary licenses, and implement AML and KYC procedures to operate legally and transparently. Consulting with legal experts in cryptocurrency and iGaming law is crucial.
