In today’s article, we will be exploring a little-covered but steadily evolving aspect of the crypto casino world; one which has arisen completely organically and yet is developing into an ecosystem in its own right: The development of crypto casinos into Financial On-Ramps in Emerging Markets.
But bottom line; crypto casinos are just a bit of a laugh…right?
Well, in fairness, that is how pretty-much everyone (in the ‘first-world’) views crypto casinos. Yes, crypto casinos encompass the latest tech, utilise cryptocurrencies, preserve player anonymity and in essence, enable players to enjoy their gambling whenever they want, from wherever they want and deposit and withdraw instantly; all without recourse to, observance by, or interference from third-parties, Governments, authorities…or absolutely anyone. And this is in itself, is becoming an absolute rarity in the ‘outside’, non-crypto world.
But even within this only-a-laugh crypto casino worldview, some not immediately apparent characteristics and social benefits reveal themselves, for instance:
- Low transaction fees; although prima face a purely financial benefit, the low transaction fees offered at crypto casinos, not only enable players to spend less on fees, thus proffering a greater return on their wagers, but also, foster greater inclusion, by opening up access to players to whom playing might not previously have seemed financially worthwhile.
- Micropayments; because crypto casinos are able to offer players micropayment wagers, this again, not only opens access to a wider range of ‘just-for-fun’ players, but fosters a calmer and eminently lower-pressure environment, where players can relax without the stress of large financial pressure.
- Global reach; because cryptocurrencies allow for instant, borderless transactions, regardless of a country’s local banking infrastructure, remittances, especially micropayments can be actioned, without them being swallowed by remittance costs and fees, thus allowing truly global access and connectivity.
Although there are, in fact, other notable benefits of crypto casinos, even within the just-for-fun paradigm, we highlight the above because, they very nicely segway into how crypto casinos are rapidly forming a valuable eco-subset; that of a financial on-ramp in emerging markets.
Introduction to Crypto Casinos as Financial On-Ramps
Although unimaginable to many of us to whom the utility and stability of our banking system and our currency is completely taken for granted, there are many countries in the world where this is just a distant pipe-dream. There can be many circumstances at play in countries such as these, the most common being; high inflation, strict banking controls, capital controls and foreign exchange shortages.
In such environments, large swathes of the population may also be either unbanked (have no access to mainstream banking), or underbanked (maintain a basic banking relationship, but rely on non-banking alternatives for basics such as cheque cashing, money orders or loans, due to high costs or unavailability); thereby leading to leading to significant commercial exclusion and, as we shall see, significant disadvantage. In countries where circumstances such as these prevail and where the traditional banking systems often fail large swathes of the population, great financial peril can be, and historically has been close at hand.
- Inflation; although requiring little explanation as we will all have experienced this phenomenon, we certainly have not experienced the worst ravages of it here in Europe, since the 1920s. In extreme cases, the buying power of local currency simply evaporates; prices of everything, including the most basic food staples can often increase several times daily. In the end-phase of such circumstances, one’s currency can simply become completely worthless, as was the case in Weimar Germany in the 1920s, where, in the end, piles of banknotes only had utility as ‘firewood’.
- Banking controls / capital controls; in the earlier stages of an inflationary / currency crisis, confidence in banks rapidly erodes. Oftentimes, there can be a rush to withdraw one’s funds from the banks due to lack of trust, and in order to convert them into more stable, tangible assets or currencies. Inevitably, to avoid a ‘run’ on the banks, the banks often resort to first restricting cash withdrawals to nominal amounts and then simply closing branches so that no one can actually make withdrawals.
Similarly, for anyone looking to exit their declining currency in order to exchange it for another currency that will maintain its value (traditionally the U.S. Dollar, Swiss Franc or even Pound Sterlng), Governments usually incline towards strict capital controls severely restricting or completely blocking such currency conversions or blocking the exit of any capital whatsoever from the country.
So, this all seems very dramatic, but if in doubt, why not just ask the citizens of : Argentina (1989/90); Bolivia (1984/85); Brazil (1986/94); Zimbabwe (2007/09); Yugoslavia 1992/94); Venezuela (2016/21 +), Nigeria (1982/86 & 2009/10 & 2016/17 & 2020),and others!
However, the mere presence of high inflation, strict banking controls, capital controls and foreign exchange shortages does not, of course, guarantee a hyperinflationary or banking crisis; but what these circumstances, alongside un-banking and under-banking, high transaction costs and slow outcomes does usually guarantee, is a large number of people looking for transactional alternatives and a route to safe-haven hard assets.
…enter, Crypto Casinos as financial on-ramps and alternative financial rails.
The Rise of Crypto Casino On-Ramps
It is said that circumstance often births resilience and so it has been with the crypto casino on-ramp evolution; and let us now examine exactly how this evolved practically.
As stated, the circumstances above creates a demand for alternative financial conduits and increasingly over the past ten years, cryptocurrencies; especially crypto assets such as stable coins have not only circumvented the shortcomings of the traditional banking offerings. However, they have also provided financial rails to the traditionally unbanked by providing a form of crypto pseudo-DeFi to become effectively, the de-facto banking infrastructure for millions of people globally.
It must also be noted at this point, that a prime attraction in the rise of crypto casino as the preferred on-ramp stems in no small part from the ability of crypto casinos to deal in micropayments, thus expanding their access to a much wider audience than traditional banking De-Fi.
The Nitty-Gritty
So, before getting down to the specifics, it might profit us to briefly recap upon the subject of stablecoins, as this very principle is foundational to the casino on-ramp phenomenon.
Stablecoins are, of course, cryptocurrencies directly pegged to stable assets (often the US Dollar). Two of the most prominent of these are USDT (both ERC 20 and TRC 20) and USDC. They are both pegged exactly 1:1 to the US Dollar i.e. for every one of these coins in existence, there is a US Dollar in the vaults backing it and thus, they effectively become digital cash equivalents.
But let’s do a quick cross-check to prove the validity of this equivalence:
- Stablecoins are widely recognised and accepted as payment.
- Stable coins are eminently portable.
- As they are ‘virtual’ assets, they are certainly durable.
- Stablecoins are absolutely divisible.
- Each stablecoin unit is completely uniform and also, therefore, fungible.
- By their very nature, stablecoins are stable in value.
Looking at the characteristics listed above, we see exactly the qualifying characteristics of ‘money’ itself, thereby most certainly validating the equivalence of stablecoins as digital cash.
But besides establishing the absolute utility of stable coin, let us now examine the technical drivers of crypto casinos as on-ramps, because to fully understand how crypto casinos actually perform this function, we need to be familiar with the technology and network effects which underpin them.
- The importance of Smart Phones; throughout low infrastructure economies, mobile phones were ubiquitous long before access to traditional banking. Due to their pervasive penetration, within much of Africa and Southeast Asia and the Southern Americas, smartphones are now the primary gateway to financial services.
- Crypto Casinos and Crypto Wallets; having easy access to a smartphone, users can then directly on-ramp into crypto casinos, crypto wallets and crypto transactions via a unified, hybrid ecosystem. As most of us will have directly experienced, both crypto casinos as well as mobile crypto wallets (such as MetaMask, Trust etc.) are characterised by very easy onboarding. Starting from onboarding onto a crypto casino; most casinos offer crypto funding via a linked third-party provider in order to fund one’s casino wallet.
So practically; you just remit to the provider who remits stablecoin to your casino wallet, which can then become a sort of personal liquidity hub. An additional feature of many crypto casinos is easy integration with third-party online crypto wallets, such as the aforementioned; you can then fund these from your casino wallet and thereby make crypto remittances.
Of course, it is also possible to achieve similar results directly via one’s online wallets, but it seems that a hybrid ecosystem has evolved incorporating all components of the crypto casino, crypto wallets and DeFi worlds into a unified whole, with usage and combinations of usage determined on an ad-hoc basis based upon need and utility of combination.
Evidential Markers
The empirical, on-the-ground evidence that crypto casinos, in combination with mobile crypto wallets and DeFi apps, have become financial on-ramps for millions across Africa, Southeast Asia and the Southern Americas is overwhelming: But here at Mega Crypto Casino, we like to dig a little deeper and to that end, we will now look to some hard-and-fast quantitative data to support this empirical evidence.
The High Volume and User Access Giveaway
- Over the course of 2024, crypto casinos generated something in the region of USD 81 billion in Gross worldwide revenues…which was a notable five times the volume from just two years previously. Although no specific proportion of this volume can be isolated by region, technical metadata analysis indicating VPN usage, does anecdotally attribute this surge in volume to adoption in regions where gambling is either completely prohibited, or heavily restricted.
- Users in developing countries often bypass regional restrictions on gambling, currency controls, banking restrictions and KYC checks via the use of VPNs enabling large flows of retail funds to enter the crypto blockchains via these crypto casino platforms.
It seems safe then, to deduce that the figures and technical data above indicate that crypto casinos have evolved into high-volume gateways for individuals in these developing regions to covert Fiat onto cryptocurrency, effectively acting as financial on-ramps bypassing traditional channels.
Integrated ‘Buy Crypto’ Mechanisms
- As we had previously touched upon, many crypto casinos now integrate third-party ‘Buy Crypto’ widgets. These enable users to purchase crypto from directly within the crypto casino interface via cards or bank transfers, creating a straight-through conversion path from Fiat currency, directly into crypto, thereby by-passing banks, exchanges or any other local third-party.
- It is fair to deduce that crypto casino users within developing countries would overwhelmingly be utilising the in-platform ‘Buy Crypto’ mechanisms in their Fiat to Crypto conversion process.
Here the hard data becomes somewhat blurred, because aggregated data solely on ‘Buy Crypto’ widgets is completely proprietary. However, what can be determined from 2024 data is that somewhere in the region of 58% of crypto casino deposits (almost USD 47 billion), now come from direct stablecoin deposits.
Conversely, this means that 42% (USD 34 billion) of deposits are made via the in-platform ‘Buy Crypto’ widgets. It is logically valid then, to take the previous VPN usage projections and attribute a sizable proportion of the ‘Buy Crypto’ utilisation data, to on-ramping from developing regions.
KYC/AML Enforcement
Finally, we will approach location defined on-ramping from a somewhat more esoteric and non-data driven angle.
- Reports and formal investigations into offshore crypto casino platforms, have highlighted that (from the point of view of governments and authorities), they have very cursory, or next to no identity verification processes; especially in regards to initial deposits or relatively low value accounts. Of course, as a counter, it is to be noted that from a user’s point-of-view the whole utility of a crypto casino is the anonymity of crypto and the complete freedom to utilise one’s funds without let or hinderance, without supervision and without reference to or restriction from any authority, government or any third party.
- Enforcement agencies, including our own U.K. Gambling Commission have noted that non-regulated crypto casinos are nebulous in accounting for crypto assets and are exploiting AML loopholes, leading to enforcement notices and attempts at shutdowns.
The weakness, or absence, of strongly enforced KYC or AML checks makes any funds entering a crypto casino very much harder to trace. If we then note that ‘informal’ or ‘grey’ financial on-ramps with these very characteristics are a common on-ramping tool within developing regions, we can then, with some caveats, infer a direct connection between crypto casinos and financial on-ramping within these very regions.
So Now What?
As we have seen then, across many inflation affected and banking-restricted regions worldwide, crypto casinos are more than just a ‘bit of a laugh’; they provide a much need financial on-ramp.
Across swathes of Africa, Southeast Asia and the Southern Americas, millions of people now use stablecoins, crypto casinos and mobile crypto wallets as a vital means for saving, for peer-to-peer transactions and for accessing global financial markets, precisely because of local economic factors and because local banking systems have either locked them out or have failed to satisfy their needs. But more than this, it is important to note that whilst crypto casinos do indeed, serve as informal financial on-ramps, stemming from this, other broader trends are becoming apparent:
- Stablecoins are replacing local currency in some contexts and where the local currency is failing.
- Smartphones are THE financial access portal for millions who have been excluded from the traditional banking channels.
- Crypto Casinos, crypto wallets and DeFi systems have all combined into an amalgamated eco system which are now becoming De Facto financial rails for savings, payments and trade.
So to sum up; the next time you log in to your favorite Crypto Casino for a bit of well-earned down time it may be worth remembering that the same Crypto Casino may at the same time, be providing a valuable financial lifeline for otherwise abandoned users somewhere across the globe…and that can surely be all to the good!
Well, dear readers, we hope that you have enjoyed our latest deep-dive into the world of crypto casinos, cryptocurrencies and all things crypto related, and that you have additionally, gained something of value thereby. We hope that you will visit Mega Crypto Casino again soon, for the next in our series of crypto related articles, and we look forward to welcoming you back.