American gambling companies and state regulators should embrace the broader use of blockchain to protect consumers, says Tim Dierckxsens, the co-founder and CEO of Venly, a Belgian blockchain technology provider. But he has his doubts it will soon happen.
It’s a logical conclusion about an industry that has taken so long to warm to modern advancements like a cashless economy.
Blockchain is a digital public ledger that cannot be altered, creating an unbroken chain of events through all transaction stages. This is possible because the record is stored on a peer-to-peer network across multiple computers to prevent later alteration.
It is often incorrectly conflated with cryptocurrency, although digital has become the dominant currency in these transactions. Advocates advance blockchain as the backbone of a more secure system in an age when high-profile hacks have targeted major gambling companies like MGM.
Dierckxsens, whose clients include The Sandbox, one of the most popular metaverse gaming platforms, is convinced.
“Absolutely. I think if they were less fear-driven and more interested in understanding the amount of transparency you could adopt through it, they’d be far more inclined to start pushing for it,” Dierckxsens told Gaming Today. “But it’s human nature not to want to embrace change and to keep the status quo as long as possible because that is comfortable. That’s what we know.”
Gambling Industry Slow to Adopt Digital Advancements
Right now, only a few gambling companies use it for privacy or compliance functions, said Martin Lycka, the senior vice president for American Regulatory Affairs and Responsible Gambling at Entain. He added that regulators “are yet to be convinced that it’s more than a curiosity.”
“They should be the first ones to move on [this] technology because, with the increased transparency, you can have some kind of dispute-free resolution,” Dierckxsens said. “And if you can look into the origins and the transfers of every transaction, then you can arguably say, from a jurisdiction point of view, it would make even more sense to obligate the use of blockchain technology. That’s because of the higher transparency you get to the technology.”
According to the National Conference of State Legislatures, almost 30 states have somehow addressed blockchain legislation. But nothing so far involves gambling regulation. A good deal of these involve anti-money-laundering procedures and cryptocurrency. There is much more to the blockchain, though, Dierckxsens said.
“If you want to go beyond the transfer of a digital asset, like a cryptocurrency, then there are certain things that you can program,” he said. “A digital asset in the form of a ticket that could be something that you transfer over a blockchain. It can be in gaming. It can be in real estate. It can be in ticketing loyalty on fan engagements. There’s just so many different applications where the technology itself over time will make sense.”
But he admitted that future gambling expansion into the metaverse, another nettlesome topic testing regulators and consumer protection, would likely require using some other currency besides government-backed money. Metaverse casinos like Decentraland doing business – albeit not as much as two years ago – in a Web3 realm require users to purchase money native to their platforms.
“I think it’s going to have to be a cryptocurrency or an in-game currency,” Dierckxsens said. “We’re not reinventing the wheel here. If you go to PokerStars and buy in to play Texas Hold ’em, the fiat inflow is you have a credit system internally, that game currency being a cryptocurrency. That is not a big difference from what you have today. The only difference is that you could withdraw and use that currency elsewhere.
“I don’t think either is good or bad, but there’s a reason why so many games have their own currency today. And that’s usually because if you’re a consumer and you’re going into a game, the amount of times you’re going to do a transaction is very expensive. But if you top up once, say a higher amount, you’ll pay a certain percentage on the top-off. But every time you do a currency in-game purchase, you won’t spend on transaction fees the whole time.”
Answers have been edited for style and clarity.