Gambling With BitCoins – Or On Them?

Bitcoin books sound great. They offer semi-anonymous to anonymous betting with quick deposit and withdraw methods. All you have to do is set yourself up with a BitCoin wallet then get your hands on some BitCoins and you’re off and running. It would be a significant improvement over the current online sportsbook conditions. A new and exciting option – if it were only that simple.

Gambling with BitCoins is more about gambling ON BitCoins than anything else. When you buy your BitCoins you are buying in at the current “currency” price just as if you were buying Euros or Pesos. When you cash out it’s the same deal. You get the prevailing rate and there’s always vig on the transaction. The buy and sell prices differ slightly with the difference being the BitCoin banks fee. It’s just like trading currencies except the volatility is off the charts compared to any established currency fluctuations. (There’s a BitCoin price widget on each LVAS BitCoin page showing the current average cost of a BitCoin) These fluctuations are where the major problem lies, at least for those who are more interested in betting on sports than betting on the health of BitCoins.

BitCoin prices may stabilize in the years to come, but right now it’s an unacceptable rollercoaster ride for your bankroll and in 2014 that coaster ride was all downhill. A year ago today (Jan 12 2014) BitCoin prices stood at approx $857 each. Exactly one year later they clock in at $228. BitCoins had spikes up over the course of the last twelve months but the overall decline is steady. Those in the BitCoin industry who benefit form BitCoin transactions will say that the infrastructure is growing at a strong pace and the table is set for big things down the road. That may be, but the fact remains that until things stabilize, you could have a very good season betting on sports and come out behind if your bankroll currency is BitCoins.

Examining how a typical football bettors operates paints a not so pretty picture this year. Let’s say Joe Gridiron opens a BitCoin account prior to the 2014 football campaign. Preseason starts in early August so he sets himself up on Aug 1. On that date BitCoins sold for $598, which represents a drop of 25% from the $801 it stood on the day following the Super Bowl. Undeterred, Joe takes the plunge and drops 5K worth of BitCoins into his BitCoin sportsbook account and commences betting. 5K buys Joe 8.3 BitCoins after fees which is about $600 per BitCoin.

Joe is on his game and over the course of the next 5 months runs his balance up to 20 BCs, an amount that would have been worth $12,000 on Aug 1. After New Years, Joe decides to cashout and comes to the stark realization that despite increasing his BR by 140%, he ends up losing $440 due to the fluctuation on his BitCoins. Joe hit 60% on the season and managed to turn $5,000 into $4560. Needless to say, he does not feel like much of a winner. Joe’s big season turned into a waste of time due to “market conditions”.

Advocates of the BitCoin system will retort that Joe could just as easily have made out had the price of BitCoins rose or that maybe he should have held the coins a while longer and waited for the next upward spike to cash out. If your intent is to gamble on BitCoins then these are both acceptable counters to Joes unfortunate situation. For the vast majority of punters this is nothing close to what they are accustomed to nor interested in.

There are BitCoin sports books that convert you to USD after you deposit. At those books you do not have to “hold” your coins and endure the flux that takes place at books that do not convert. Whether they require you to cash out in BitCoins or allow USD cashouts you avoid the currency ride. Holding BitCoins is the gamble and many books recognize this. As mainstream books start accepting BitCoins they almost certainly will all do the conversion. Heritagesports.eu is an established book that has started accepting BitCoins and have a setup that is easy to use and understand. Others are adding the option as well. As long as everyone jumps out of BitCoins as soon as they take possession of them then the flux risk is avoided. The fact that all parties feel the need to do that illustrates the obvious risk of BitCoins.

Maybe things will settle down sometime soon as BitCoins become more a part of our everyday life. Right now though, in the current Bitcoin environment, when you bet at a strictly BitCoin sportsbook you’re not as much a sports bettor as you are a high-risk currency trader.

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UPDATE: BitCoins prices continue to freefall. On Wed Jan 14 the price stood at $191, a drop of over 60% since the start of the football season and 34% over the last week.

Posted in Archives, LVAS Now
5 comments on “Gambling With BitCoins – Or On Them?
  1. anthony says:

    The moral is you shouldn’t buy bitcoins just to bet at a bitcoin shop. If you’re already dealing in bitcoins for another reason, then it doesn’t matter what you do with them, including gamble.

  2. Mike says:

    Very good article. If you deposit bitcoins at Anonibet.com, you may request an account in US dollars. They convert bitcoins to cash for both deposits and withdrawals. Players don’t have to worry about price fluctuations of bitcoins.

  3. Paulie says:

    Most sportsbooks who use bitcoin allow you to fund your account in dollars. The sportsbook gets your bitcoin, converts it to dollars, then you bet with those dollars.

    When you cash out, the sportsbook buys bitcoin at market rates, then sends you that bitcoin.

    No risk at all. And certainly quicker and cheaper than waiting on a Western Union or check.

    • FrankB says:

      That’s exactly how you want to go about it. Get your BCs converted to dollars
      ASAP. If a book won’t do that then you have that flux risk. If a book will, then
      all you have to worry about is what you do with the BCs after you cash out.

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