Online Betting with Cryptocurrencies in Latin America
Author:
Jacob McKenzie
El Salvador is now the first country in the world to legally recognize Bitcoin — a popular cryptocurrency — as an official currency, which will now be accepted for payments everywhere in the country alongside the US dollar. Citizens and global experts are bitterly divided about the move, which could cause chaos with its fluctuating value. However, the move is intriguing for the Latin American online casinos and sportsbooks, some of which already accept crypto payments.
El Salvador has adopted Bitcoin as one of its two official currencies. Could other Latin American countries be next? ?Thought Catalog/Unsplash
Breaking Ground in El Salvador
El Salvador’s President Nayib Bukele made the controversial decision to make Bitcoin a form of legal tender in the Latin American country back in June of this year. Some experts within and outside of the country were surprised, taking into consideration the currency’s instability and El Salvador’s relatively small economy.
Neil Wilson, a chief market analyst at Markets.com, explained his skepticism to the BBC, saying:
“El Salvador is tiny, in terms of economy. This looks like nothing more than an attention-seeking move by the autocratic regime. Bitcoin is intrinsically bad as a means of payment since it is quite costly for small transactions.”
This essentially goes against the main argument in favor of the move — that it would benefit citizens that do not have access to traditional bank accounts, as well as those who receive or send money between El Salvador and other countries.
According to the BBC, over two million Salvadorian workers send money back home to their families from working in other countries around the world. Those remittances make up a sizable 20% of the country’s GDP.
So there is a perceived benefit to offering a seamless digital currency. It sounds convenient and cost-effective to send money home with the click of a button. However, crypto-analyst Glen Goodman disagrees with this assumption, saying that:
“A recent academic paper showed the exchange costs may actually end up being even higher. It is also being imposed on small businesses against their wishes. According to a Chamber of Commerce survey, 82.5% of respondents do not want to receive remittances in Bitcoin, mainly because its price is so volatile and unpredictable. If it is not broken, it is fair to ask President Bukele why he is trying to fix it. I have not heard a convincing answer so far.”
Goodman touched upon another serious issue: the will of the Salvadorian people. Protestors in the country’s capital San Salvador have also made it known that they do not trust or want the currency change. Furthermore, a survey by the Central American University highlighted the people’s lack of understanding of Bitcoin. 68% of those surveyed said they did not support the national implementation of Bitcoin in El Salvador.
Even the World Bank has advised against the decision by President Bukele. It is difficult to say what the results will be in El Salvador. What we do know is that it is not the only country interested in adopted crypto. Cryptocurrencies have intrigued Latin American states for some time, and some companies specializing in these technologies have also crossed over into the world of sports betting and online casino gaming.
What other countries may follow suit?
Though El Salvador is the first country to officially adopt Bitcoin as legal tender, many neighboring countries could follow suit soon. In particular, relevant parties in Paraguay, Mexico and Panama have also expressed interest.
It is clear that lawmakers and governments see cryptocurrency as a new frontier that they do not want to be left out of. As Panamanian congressman Gabriel Silva put it, “This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub we need to support cryptocurrencies.”
Crypto Embraced by Online Gaming Industry
None of the politicians in the aforementioned countries specifically spoke to the potential of cryptocurrencies for online gaming. However, those industries have already begun to embrace crypto payments as online gaming continues to expand through Latin America, both in the midst of pandemic and progressing regulation in certain states.
It is not hard to understand the appeal. By its nature, crypto is digital and can work seamlessly within someone’s digital wallet while making online bets. It does not require a transfer of funds between banks and may even save time.
Furthermore, online gaming fans have seen it as a possible way to get around complex gaming regulations. If bank transactions are avoided, users feel they can safely use online gaming platforms without fearing legal repercussions.
There is quite a lot of gray area in online gaming through Latin America, where online casinos and sportsbooks are not regulated in many countries, yet offshore casinos operate more or less freely. Despite the gray area — or perhaps because of it — crypto-based companies are flocking to make deals across the region.
For example, in Venezuela, a new gambling hall in Caracas announced they would accept cryptocurrency as payment back in January 2020.
Meanwhile Playbetr, which is based in Cura?ao, has made a name not only in its home country but also in Europe where it recently became a sponsor of Paris Saint-Germain. Platbetr is not only an online betting operator — making the interest in sponsoring a world-class sports team clear — but also a cryptocurrency expert.
Whichever way you slice it, it is unlikely that the world’s fascination with crypto is going away any time soon. In Latin America and in the world of online bets, it is likely to continue to take hold in the coming months and years.
