0

Let's say an online casino has btc as a deposit and withdrawal method. Assuming A player deposits 1 btc, plays and does neither win nor lose much and then cashes out the balance, which happens to be exactly 1 btc. I am using simple values to focus on the main issue.

However, the btc price was 15% volatile since the deposit was made.

Technically, the player has neither won nor lost based on game play, but he would get a free 15% in value just due to the btc price increase.

The opposite applies if btc loses 15% of value.

Of course it is a nice thing for the casino if the btc price plummets, but potentially disastrous if the price goes up, assuming an average 4% house edge for the casino.

What would be a fair solution for both parties?

Edit: The main game play would be slots, but the same problem arises for Black Jack, Roulette and sports book events. Poker could be affected to a degree as well.

There is no crypto to fiat conversion. An option would be to convert the bitcoin to a Casino token, but fiat is off the table .

Improve this question
5
  • If the player wins, isn't the BTC coming from a losing player, rather than the casino itself?
    – Rodrigo de Azevedo
    Apr 21, 2021 at 2:49
  • @Rodrigo de Azevedo . Not really, imagine every player is a bitcoin depositor, the house takes 4% on average, but the btc price goes up by 15%. The casino would be in a severe deficit for that period. And the initial btc wallet has to have some funds to cover a potential big winners payout. It could or could not be coming from other players losses, you never know. Even an online casino can get unlucky and have negative revenue for a month sometimes.
    – ptts
    Apr 21, 2021 at 3:09
  • At the roulette table, you are exposing yourself to risk, for you're "the house". If your casino only had games in which players play against each other and you're never "the house" but rather a venue that "rents" tables, then your problem would disappear. If that is not attainable, then why not convert the initial BTC deposit into a dollar amount and gamble in dollars? The players would bear the "FX" risk, not you. If that is not attainable either, why not use BTC futures?
    – Rodrigo de Azevedo
    Apr 21, 2021 at 10:14
  • 1
    The conversion to fiat is legally delicate. The conversion to a tether like token would be possible, though. Thanks for the hint for a rent like service, but that is not part of the core business(I have updated the question).
    – ptts
    Apr 21, 2021 at 13:57
  • I assume you'd need a licence to operate such a casino, for it would be trivial to use it to launder BTC. In other words, it could be used as a mixer.
    – Rodrigo de Azevedo
    Apr 21, 2021 at 16:01

1 Answer 1

Reset to default
2

Do players gamble in USD or in BTC?

If players gamble in BTC then it is not your problem to deal with. You just deal in BTC and take a cut of the BTC. If the player who wins BTC ends up losing USD, that's not your problem - just like if a player goes to a European casino and wins EUR but then loses money after converting to USD, it's not the casino's problem.

If players gamble in USD and use BTC only as a transfer mechanism, then you should have some sort of financial mechanism to hedge against price changes. For example, you could sell the BTC as soon as you get it, and buy more BTC when players withdraw.

I am not a lawyer and this is not legal advice.

Improve this answer
4
  • good point , I have added an edit: There is no crypto to fiat conversion. An option would be to convert the bitcoin to a Casino token, but fiat is off the table. Looks like cashing in on a bitcoin price drop would be morally justified. The hedging after deposits could be laid out in the terms and conditions saying the casino will consider the price at the moment of the deposit for the next withdrawal.
    – ptts
    Apr 21, 2021 at 13:52
  • @ptts If everything is in bitcoin, you haven't gained or lost anything from a price rise or drop. You had 1 bitcoin (for example) and after the price dropped, you still had 1 bitcoin. Look at it the other way: the price of USD rose. If your job was to cash in on USD price changes, you'd be a forex trader, not a casino.
    – user253751
    Apr 21, 2021 at 14:05
  • However, the initial hot wallet needs to have a substantive amount, paid for by the casino. Even if all the funds in the wallet came from depositors. Let us draft an extreme example. At the time of the deposits bitcoin averages 10k in GBP per btc. All the players use minimum turn over and are not going all in(all or nothing). They leave their balance pending and then request a withdrawal once 1 btc is valued 20k per btc. The Casino would be providing a better service to the players than any crypto exchange out there. This risk needs to be mitigated imo.
    – ptts
    Apr 21, 2021 at 14:36
  • @ptts They have to deposit bitcoins before they can withdraw bitcoins, don't they? If they withdraw 1 BTC (each) they must have deposited at least 1 BTC (on average). I'm assuming they win money from each other and not from you or else you fail as a casino, and I'm ignoring the money you win from them. So what's the problem? They deposit a bunch of BTC, they play some games, then they withdraw a bunch of BTC. You don't make a loss from that. Except whatever it costs you to make the games happen.
    – user253751
    Apr 21, 2021 at 15:14

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge that you have read and understand our privacy policy and code of conduct.

Not the answer you're looking for? Browse other questions tagged or ask your own question.