A trade group that represents some key racing operators in the Asian-Pacific region has shared some concerns over the increasing number of online gambling platforms that provide their customers with the chance to place bets by using digital currencies, such as Ethereum, BTC and Tether.
Recently, a report on the use of digital currencies and blockchain technologies for illegal gambling has been released by the Asian Racing Federation (ARF) Council. The Council deals with illegal gambling- and betting-related financial crimes. In its report, it has warned that digital currency has the capacity to circumvent the financial regulatory bodies’ and gambling watchdog’s scrutiny, which, on the other hand, makes it easier for some individuals and organizations to avoid the so-called “know-your-customer” procedures and the anti-money laundering checks.
According to the claims made in the report, about 780 foreign gambling websites accept no less than one of the following five cryptocurrencies – Ethereum, Ripple, Tether, BTC and BCH.
The report also says that the number of online casino and betting platforms that accept the BTC digital currency increased by 13-fold and 7-fold, respectively, since 2018. Furthermore, the Council’s report alleges that by accepting digital currencies, such websites make it easier not only for customers to fund their gambling but also allow gambling companies to make offshore transfers to the proceeds they have generated as a result of illegal gambling services.
Gambling Subsidiaries Using Cryptocurrencies Could Undermine Licensed Betting Operators’ Services
The above-mentioned report has pointed out Citibet, a betting exchange that targets primarily Asian customers, as one of the leading operators that use digital currency to attract local people without being authorized to do so. It has also highlighted the fact that gambling is currently either not legal or are allowed to only offer part of their services in most Asian countries.
In fact, the Asian Racing Federation Council has long recommended that the betting exchange services of Citibet should be avoided. Even more, the latest report of the Council suggests that the operator has rolled out cryptocurrency-only gambling subsidiaries that are undermining the services offered by licensed betting companies operating in Australia, Hong Kong or other jurisdictions across the Asian-Pacific region.
For the time being, Ethereum and BTC are still the most popular digital currencies used for online betting. However, reportedly, Tether generated over one-third of the overall annual outflow of digital currency from East Asia in the 2019/20 period. In January 2021, the so-called “stablecoin” was cited by the Ministry of Public Security of China as a digital currency that is playing an increasingly important part in the illegal payment processing services carried out by some gambling companies.
The ARF report claims that the Tron blockchain has been focused on gambling-related decentralized applications (dapps). Two years ago, gambling-related dapps generated $3.9 billion from the overall $4.4-billion transaction volume on Tron, but the Council has warned that popularizing greater anonymity by using such dapps could lead to serious problems for gambling operators that have already been given the nod to operate in some Asian countries.