It’s no secret that traditional gambling comes with mental and behavioral health risks for certain segments of the population. These risks have been inflated by the digital transformation of the gambling space, as now casino gaming and sports betting are accessible in the palm of one’s hand, from anywhere and at anytime. Effectively managing consumer wellness in the regulated online gambling environment is a large enough task that requires the combined effort of public health officials, mental health support providers, regulators, and operators. Unfortunately, one thing is placing a barrier in front of these efforts, and it’s coming from the blockchain.
Blockchain is the foundational technology that enables the existence and operation of cryptocurrency. It provides the infrastructure necessary for decentralized digital transactions without the need for a central authority like a federally recognized bank or government. Despite the legal grey area (more on this below) gambling with crypto has become commonplace in the United States. Data collected from the most recently completed annum confirms that around 74% of the American online gambling market (more than $67 billion) flowed through cryptocurrency-fueled channels.
This is a big problem.
Why? Because gambling with cryptocurrency may significantly elevate the risk of mental / behavioral health compromise. If you currently engage in or are considering casino gaming or sports betting through any operator who accepts crypto as a form of payment, please read ahead.
Overview of Why Online Gambling Using Cryptocurrency is Considerably More Threatening to the Mental Health of Players
I. Gambling on Two Different Levels
For those who are predisposed to impulsive behavior, placing wagers on casino games or sports on cryptocurrency-enabled platforms features the same risks of developing problem gambling as those who accept traditional forms of payment, at minimum. There is another layer to consider, however. In addition to gambling on the outcome of an online roll of the dice, turn of the cards on a blackjack table, score of a football game, or individual athlete’s performance, anyone using a crypto-gambling site is also gambling with currency valuations.
Cryptocurrency prices fluctuate more than traditional currency due to a lack of traditional valuation methods, high speculation, and fragmented liquidity. Cryptocurrencies lack a government-backed legal tender status and are therefore greatly influenced by supply and demand along with economic and sociopolitical forces in addition to the influence of social media and even celebrity endorsements. In other words, an account balance one holds with a crypto-gambling operator today may look a lot different tomorrow, without making a single wager in-between.
Research confirms that cryptocurrency volatility can lead to severe mood shifts, anxiety, stress, and depression among traders. Now consider what that looks like for individuals who make bets on cryptocurrency gambling sites, who effectively become both gamblers and traders by default. This adds another layer of complexity to an activity (gambling) that is already complicated enough for vulnerable members of American society.
II. Innately Facilitates Microtransactions
Microtransactions in gambling are small on-platform wagers and bets that essentially leverage gambler psychology to encourage more spending. Cryptocurrency enables microtransactions in gambling through the following:
- Efficiency and low fees: Cryptocurrencies, especially those with Layer 2 solutions, offer swift transactions with minimal fees, making micro-bets more seamless when compared to those funded through traditional banking systems. The latter have higher fees and processing times that can make very small gambling transactions impractical.
- Accessibility: Cryptocurrency gambling sites allow players to place smaller bets. This makes it seem as if online casino gaming and sports betting is more “accessible” for casual gamblers who might be deterred by higher minimum stakes in traditional online casinos and sportsbooks.
- Wider Reach: Crypto facilitates cross-border (state and international) gambling, allowing players to engage in betting using microtransactions without dealing with (read: being mindful of) complex currency conversions, banking barriers, and federal regulations.
While it may seem that microtransactions as a feature of gambling with crypto is beneficial, it’s not. Numerous studies confirm that microtransactions are linked to problematic behavior. Not only to they negate the opportunity to reevaluate spending decisions, they leverage psychological principles such as variable rewards, loss aversion, and even social/peer pressure when it comes to gambling platforms. They help create a cycle of impulsive spending that is driven by the release of dopamine. This dopamine release becomes diluted over time and requires greater frequency and/or volume to sustain the same feeling.
View more on this concern in the following article; Microtransactions Addiction Awareness.
III. Occurs on Unregulated Platforms
If you’re on a website that allows online casino gaming (already illegal in nearly all U.S. states) or online sports betting (which may not be legal in your state) that allows U.S. players to deposit and gamble with cryptocurrency, then you’re using an unregulated gambling platform. Gambling with cryptocurrency is not legal in the United States, but it is the most common form of payment for illegal offshore operators because it allows them to tippy-toe around the federal government and tax law of various jurisdictions. Common offshore operators that solicit U.S. players and accept or exclusively use cryptocurrency are listed here. If you’re gambling with any of them, close your account/s immediately.
The illegal nature of gambling with offshore operators should be enough to dissuade players, but when considering the elevated mental health risks, abstinence should be considered mission-critical. They do not integrate guardrails to protect the wellbeing of players, such as monitoring-software to identify problem behavior, nor adequate self-exclusion programs. Further, they do not abide by advertising and marketing regulations regarding false or misleading promotional language, and use dark pattern UX design to keep players gambling in greater volumes and frequency.
View more on the dangerous of online gambling with offshore sites, who also allow the use of cryptocurrency.
