Repurposing Fintech for iGaming via Continued Evolution
In Fintech and iGaming Part 1, we interrogated the link between the fintech and iGaming industries, analyzing how important the the two industries are to each other. As these industries continue to evolve, we look at what this could mean over the next few years in our blog and casino reviews.
New Fintech-Led Ventures to Influence iGaming
In August last year (2021), the launch of Moonbet by Decentralized Gaming Technologies S.V., an innovative venture that is aimed at helping the masses own the majority of both online sportsbooks and casinos via the Blockchain technology's capabilities, has the potential to completely radicalize an industry that, if it gains significant interest, could turn out to be a major threat.
Founder and CEO of the Moonbet Ecosystem, Jason Poprawa, who has experience in the roles of sportsbook and casino manager for traditional online betting platforms, revealed the details of the concept, that with the right level of awareness, could eventually take off:
Currently, owning a casino or sportsbook is for global conglomerates or high-net-worth individuals that can put up the capital themselves, then receive all the profits.
With Moonbet, our community members receive regular profits, have a say in the project through community governance, and can be a part of all organic marketing initiatives.
A recent report by online gambling software and content provider SOFTSWISS, which explored a number of links between iGaming and Cryptocurrency, found a significant amount of interesting data.
Crypto Bets Continue to Increase
Arguably the principal conclusion was that the number of bets that are being placed in Cryptocurrency is dramatically on the rise. COO at SOFTSWISS, Andrey Starovoitov divulged some of the main reasons why this is:
This strong growth is not only due to SOFTSWISS' organic development but also owes itself to increased digital consumption around the world. iGaming companies are investing more and more in marketing.
This leads to an increase in the popularity of online gaming and betting among female audiences and young players over the age of 21 who actively use cryptocurrencies in their daily lives in general and for online betting in particular. This is reflected in the increasing share of crypto in iGaming.
It was revealed that the difference between Cryptocurrency and FIAT (government-backed currencies) in online gambling is that the latter is starting to catch up and is certainly well-placed to overtake in the near future.
Staravoitov continued: "This dynamic is most likely due to the growth and development of the number of crypto brands. While in the third quarter of 2020, they were still newcomers to the market, they can be considered experienced players in the crypto gambling industry this year. The expansion of these brands into new markets has also played an important role in this."
Online Gambling and Cryptocurrency Alliances - Regions
Based on the last two years, arguably, one country which has proven that it could be a noteworthy force in the online gambling industry is the USA, with analysts predicting that the market alone could surge past the $100 billion mark by 2025.
With multiple states having already passed legislation over the last couple of years to approve online gambling, online sports betting, or both, the U.S. has witnessed explosive industry growth in these states, this proving to be particularly lucrative from a tax generation perspective.
States such as Michigan and Illinois are already benefitting from having passed online gambling bills, in addition to the recently regulated New York, which is understood to become somewhat of a major influence on the U.S. online sports betting market. However, the state of New York is also somewhat of an epicenter for the fintech industry, with well above 600 different fintech companies having an influence.
It has, in turn, led to the state having more cryptocurrency funds than Silicon Valley, the global innovation and technology hub. However, how long this stays like this remains to be seen. California (a state that is expected to pass an online gambling bill in November) is likely to compete with New York on a number of fronts.
East or West for the Merge of Two Complementary Industries?
Over the last couple of years, there has been a considerable shift from New York to Silicon Valley in graduate jobs, with many of the brightest young minds opting for a career in tech rather than finance and experiencing all of the benefits that come with it. Shorter days, flexibility, comparable salaries, and stock options are just a few advantages of working in Silicon Valley over Wall Street.
It seems though that the latter could be fighting back. Following the emergence of more Fintech and online gambling companies in the Big Apple, graduates could well have another equally lucrative career to choose from, especially if the two industries overlap; combining significantly and creating some of the world's first serious crypto-focused online casinos, backed by hedge funds and which have substantial marketing in place.
Only last year, New York-based startups attracted $6.5 billion, with this accounting for 46 percent of blockchain or crypto-centric companies, while there has been a significant increase in the amount of funding dedicated toward startup sports betting firms in the state that are Fintech centric.
Once (as expected) California passes the online gambling and sports betting bill, the race will almost certainly be on. Based on the events of the last two decades, both states are equally competitive in every progressive industry, though New York has always specialized in finance, while California adopted and embraced technology.
LATAM to Have a Major Impact on Fintech and iGaming?
Another region that is almost certainly one to watch is Brazil. The country has recently been the subject of favorable online gambling and sports betting legislation, while it has almost surreptitiously been building fintech infrastructure, with payment technology making sophisticated strides forward over the last couple of years.
Indeed, February saw the Brazilian senate take the initial step towards regulating Cryptocurrency, with a bill proposed that, if passed, could see the country become the largest Latin American market to regulate Cryptocurrency. As a result, it may also transform Brazil into a hugely attractive proposition for investors, as this will help to reduce the risk of money laundering and further financial crime.
Perhaps this is perfect timing for the country, with online gambling also set to take off. A wide number of gambling groups are effectively hedging their bets in Brazil, with this being anticipated to become a leading market over the next few years - indeed global groups have already made commitments.
UK-based online gambling conglomerate, Entain, is reportedly planning to apply for a sports betting license in the country "As soon as it is available", according to senior vice president for American regulatory affairs, Martin Lycka.
"It's a very exciting opportunity and the regulation is now finally getting there," he continued.
As the overall tax burden will be around 19 percent of gross gambling revenue, compared to some European jurisdictions the market will be more welcoming.
Such progress in the country across both industries has certainly laid the foundations for what could be another significant market for both Fintech and iGaming over the next few years.
Surge in Asian Crypto Gambling Interest
India is another country where online gambling has been firmly on the rise over the last few years. However, the development of Fintech and blockchain and the subsequent integration with iGaming helped it come to the fore.
As a result, we have seen a number of Indian online gambling companies make inroads into Blockchain technology, as well as NFT gambling. In fact, the Indian market has perhaps made some of the most advanced progress in this niche over the last 12 months.
Mainstream gambling firm, JetSynthesis has begun exploring how to leverage NFTs in games. "We have done some R&D on this and are deeply looking at some use cases. Some of the things are very obvious, like the NFTs which can be used for skins and avatars" said Rajan Nawani, CEO of JetSynthesis.
Meanwhile, Bengaluru-based Avisa Ventures' gaming division has also started to invest in a number of similar projects.
"We ourselves are planning to start our games on blockchains with NFTs. Till now, we were supporting the community by working on other games. We are in talks with 5 to 6 companies in Bengaluru to develop 2-3 games for us," said Priya Ratnam, founder and CMO, Avisa Ventures.
Furthermore, vice president of growth at Polygon, Arjun Kalsy, added even more weight to the argument that India could well be the most forward-thinking in terms of merging the two industries, stating: "India is possibly the largest gaming market in the world, thanks to the deep penetration of mobile phones and cheap data rates. With the web3 paradigm of Play-to-Earn, where gamers can monetize their time and in-game achievements - this market is set to grow multifold in the coming years."
iGaming and Fintech – Short and Long-Term Predictions
There is no doubt about it. The link is genuine. Essentially another arms race, with another dimension, has started. At first, it appeared that the U.S. would become a standalone force in the online gambling and sports betting industry, given the recent (and likely future) widespread legislation of states, in addition to the sheer volume of potential customers.
However, the added ingredient of Cryptocurrency will mean that the U.S. will almost certainly not want to miss out. With a number of markets around the world potentially threatening their position, such as Brazil and India - incidentally, markets that have a lot of potency from an iGaming perspective, it has never been more important for U.S. technology firms.
The last thing they would want is for native U.S. online gambling firms to turn their attention to other regions that have become more advanced in the world of Fintech and Cryptocurrency. There is almost an urgent emphasis on Silicon Valley-based companies to increase their development while also securing relationships with U.S. investment firms and gambling companies.
Short term, a fascinating picture has been painted about what could happen - California almost certainly holds the key to bringing the whole U.S. iGaming/crypto/fintech trilogy of industries together in one cohesive manner, with the November online gambling bill arguably paramount for San Francisco-based technology companies to start taking an interest. Of course, with other markets already primed to move, even the next six months could reveal several intriguing developments.
In the long term, pick a number. Should each industry combine effectively, the potential is almost perpetual. Combining arguably, two of the most progressive B2C and B2B (Business-to-Customer & Business-to-Business) industries for a long time has the ability to dramatically change the global landscape, especially economically. Poe was right.