Topic: [StrikeSapphire: REP FRIENDLY] Casino operators, let's talk. (Read 4035 times)

It probably just means it's illegal for other sites to take your bets. As of right now, there are only a few countries which criminalize the end-user side of the equation, and prosecute players who play at an online casino. No western democracy does this. Ironically, we do not bother to block the countries that do, so you have a better chance of getting to our site from China or Saudi Arabia than you do from the States (but then again, if you get caught it's your problem).

But effectively, if you live in the US and succeed in playing on our site, you're creating more problems for us than you're creating for yourself. To the extent that we (or anyone) understands the tangle of US online gaming law, the onus is on us to do our best to keep you out. From our perspective this is a difficult, non-trivial use of our time and resources which has an incredibly harmful effect on our business - but as it's a price we've been willing to pay, we ask Americans to respectfully help us by spending their efforts trying to change their laws rather than trying to find ways to break the laws of their own country and enter our site.


Our site is entirely web based (it's a single Flash application). While there is no Android-specific deployment, we have heard of people able to play using Android tabs with the flash browser plugin. We don't expect newer Android devices to work.


By and large, if you are playing from an IP address outside the United States, then we consider the play to be coming from outside the US. Beyond our two layers of automatic blocking, we manually analyze all logins multiple times daily and have a number of criteria for manually blacklisting. We block proxies to the fullest extent possible given the nature of the internet. What players need to know is that deliberate attempts to falsify their location are considered a violation of our terms of service, and will result in suspension of their accounts - including confiscation of funds.

If we weren't using Bitcoin, none of this would be a problem. That's because no payment service that does business with online casinos is still operating legally in the US. We could rest assured that we weren't taking payments from the States because it would be the payment processor's ass on the line. The argument could be made with Bitcoin that the real payment processor is the money transmitter who people bought and sold their Bitcoins from - however, we do not feel that those processors should be held responsible for how coins are used, and we also believe that if the US gov't wanted to make a case against Bitcoin they would start with SR and the casinos. So we believe it's our responsibility to play by the rules and that we don't have the right to get other Bitcoin businesses into trouble by irresponsibly violating national laws.

I can't go to your site.  It says my local laws prevent it...  But other sites aren't blocked... Does that mean it's illegal for me to use other sites?

Also, do you have an app for your site on the Android market?  I thought I saw someone talking about that.  Perhaps that's another site.

What laws do you have to play by if you're using your phone?  Is it where you're standing?  Where the signal is coming from?  I'm sure some lawyers have already had this discussion by now...

BitcoinsForChristmas.com is still fully functional, and will act as a free service this Christmas just like last year. It does have a nice walkthrough tutorial when someone sends you coins, explaining how to set up MultiBit and receive your gift, and then goes on to show you places where you can spend your gift. Unfortunately, both founders (GoWest and myself) have been too pressed for time to promote it properly this year. We could use some help; PM me if you're interested in being involved.

Yeah I guess it's stuck.
Seems bitcoin only based casinos don't do any significant profits to be worth it yet.

are those efforts stuck guys?

at least a tutorial, text and screenshots for easiest/fastest way to buy some bitcoins would be great for start. Video even better.
I bet a lot of people from the community will link to whoever makes that.

Great thread,

At this point, I think one of the first things agenda wise should be creating a video explaining exactly how to get bitcoins and then cash them out.  We need to have this aimed at the common person and really make it as simple as possible to understand.

The voucher scheme I have would work for you, if you wanted to create StrikeSapphireUSD and have resellers sell it around the world, then take no risk funds from them for free instantly and trade it with MtGox/Tradehill/CryptoXchange into bitcoins for no send fees but minus their usual trade fees. I'm just seeing if I can automate the entire process. Will PM details sometime this week. If your software can be notified by bitcoind that a payment has been made then you can implement this already through technocash API

Startup costs: $200 to buy a technocash gfx account
http://www.technocash.com/pages/pds_GFXaccount.cfm
Ongoing costs: Nothing

Best part is you can offer your players to cash out via any digital currency, or direct method not just bitcoins and still pay nothing in fees.

Hm. Just contacted PayByCash to see what they could do. Turns out they're owned by Visa 

Their requirements follow the Patriot Act, as they say.
http://docs.playspan.com/display/wiki/Settlement+Requirements

Foreign corporations have to fill in a W-8 form for the IRS. The funny thing about that is, I mentioned we were a casino and didn't want to take American payments. It would be illegal under UIGEA for them to route payments to a casino via the US banking system anyway; I can only assume they're not doing that, so I don't know wtf the Patriot Act or the IRS has to do with anything; I don't think we'll get real far with this one though.

You're right about Ukash's ridiculous fees, and I wish there was a better option... I'll check out Adyen and see about that, it might be a good middleman for this kind of thing.

If we started processing prepaid cards and vouchers, I don't know that we'd want to deal with withdrawals to those methods anyway. We could just take those methods for deposit and give all withdrawals in Bitcoins. If that's the case, I don't see why we'd bother to set up a separate site. We could just let people deposit to the casino any way they want, and take out Bitcoins when they want. Then we could do those conversions without charging a fee, we'd just pass along whatever the voucher processor charged us, and our income would come from people who decided to stay and play some slots. We'd just have to break even on the costs we were paying to the voucher processor, not charge a fee of our own.

I'm interested in what you're setting up. I've been through dozens of meetings with people who've floated ways of processing for us and you seem to know more about it than almost any of them.

ecardone the biggest Liberty Reserve exchanger takes Ukash directly somehow. problem with Ukash is they only pay out once a month, and will sock you with enormous fees as they've already signed agreements with wm-transfer (web money) and don't like working with other currencies, being that they are trying to build a corporate monopoly. the minimum fee to accept Ukash/PaysafeCards/CashU is something like 7%, and gambling and other high risk sites (or e-currency) are typically fleeced with 15-30% fees.

signing a direct contract with Ukash also means you must cash something like min $2-5k a month with them, and trying to just get a hold of a sales rep to register your company is like pulling teeth. if you promise them $10k a month in transactions maybe they will reduce your fees to 7%. maybe. that's not $10k in sales, that's minimum $10k in transfer fees you promise to pay them monthly. this is why there are so many Ukash brokers around, because they can trade around $5k a day in Ukash so are better to work with than Ukash directly.

Ukash was basically invented to facilitate online gambling, you'd have no problem taking it directly then using it to convert into bitcoins in the background for your customers. just find a payment gateway with it already built in and now you don't have to wait until the end of the month, the gateway pays you out within 48hrs sometimes same day. hopefully the gateway you pick does Cash-Ticket (European ATM payments), Russian ATM payments, Alipay (china), and local debit cards too. All non reversible transactions

http://www.paybycash.com/options/ almost all of these are prepaid/non reversible. I have no clue when paybycash pays out to merchants or what their fees are, but they're certainly not the only game around. typical payment gateway will charge you 10% for PSC and Ukash payments.

adyen.com is probably has the most options for prepaid customers, almost every country in the world somebody can deposit money or pay with a local cash card. they work with online casinos, and are based in the EU. just tell them no US payments. they also don't make you sign any contracts with minimum sales, you pay like 0.30 Euro per transaction for most payments, 10-20% for all the card and voucher systems. would be worth it, now somebody in Argentina or Brazil can walk into a supermarket and pay to get into your casino. if you apply to any gateways, don't say anything about Bitcoin. they don't need to know you are exchanging the money into something else. that will just add confusion, most of the sales reps are just drones anyways.

as for perfect money I don't trust them. they seem to be floated by the Hyip industry and at anytime could be seized/disappear or end up bankrupt like Euro Gold Cash went under. you could however as a casino probably sign a direct contract with them that they will buy back the PM wholesale from you at a favourable rate you can then trade into bitcoins.

if you really want to go sketchy, sign up with solid trust pay. they let you do visa/mc transactions, accept 3rd party wires, all sorts of shit. could float a bitcoin casino using them safely.. seems they ironed out most of their problems when they started out

also, this is the reason i'm building my own voucher system, because i hate Ukash/PSC and the other corporate voucher systems. big contracts, high fees, no way for small biz to get in. this voucher specifically geared towards cryptocurrencies payouts for merchants

It would be great if a site existed to trade Ukash/perfectmoney/etc. to BTC and vice versa. The big question then is where does that site land the funds from Ukash? The site's profit would be a very small percentage of the cash it had to move through the banking system and into Bitcoin. I don't think using Mtgox's bank would make sense, with all the problems they're having in Europe.

This raises the question of why Tradehill and Mtgox don't accept Ukash or PerfectMoney vouchers themselves. I have no idea what the reason is for that, but I'd assume they've looked into it...

O-shi.. lol, thought you were looking for US players. Since you're not, there's no reason you can't put a payment gateway on your site friendly to casino's that accepts prepaid payments only, stuff like Ukash, CashU, Cash-ticket, various Russian ATM services, Boleto Bancário, and all the other cash based payments with no chargeback risk (just opt out of all US payment options). Your own casino can easily convert them into bitcoins for the customers and load their accounts after payment clears, which is fast for prepaid methods sometimes instantly.

• customer uses 200+ prepaid and live methods (no chargeback) through your gateway
• gateway dumps funds into an ecoin.cc, or technocash account, or a bank account at the same institution as MtGox/whoever you want to trade with
• their account magically loaded with bitcoins ready to play as you change them in the background
• build separate site that will cash out the coins to ATM card, WU, wires, whatever you want
• resell those coins you buy back to future customers, save on exchange fees or sell back to exchange

Should also sign some sort of contract with BTC-E.com check out their payment gateway, all of CIS/Russia can use dozens of methods to get bitcoins to pay into your casino. Get cheap advertising from them on their site or something out of the deal, plus a good exchange rate.

I'd take the casino offer but am building a monster of a cash payment bitcoin gateway right now partly out of my own need for one to exist to point customers to. Would be good for casino payments too

Okay. These are excellent ideas. I can't believe you got that listed with a single pastebin post. You're right; I'm doing it wrong. You're also an SEO genius. How the hell can I hire you??? There are a few things, though:

1. I can't stress this hard enough: StrikeSapphire does not take American players, contrary to the Pastebin post, and has never taken a single bet from the US. We block the US as well as TOR exit nodes and anything we detect as coming from a VPN, for the reason you described above. It isn't worth the extra revenue. It's not just a matter of me personally staying away from the US or American Airlines; I'm relatively safe. My partners and investors, most of whom are in the US, were brought onboard with an absolute guarantee that we'd stay 100% clear of American players and US law. You don't trade your queen for a rook.

2. We understand that US gambling is the killer app for Bitcoin. Given the constraints outlined above, we're taking a long-term view and counting on the other sites to take the risks and rewards of serving the US market, which only helps Bitcoin grow as a method. We may only get one new European or Asian player for every 10 Americans they get, but that's fine with us because if this catches in the US, it will ultimately become a worldwide phenomenon. We'll take less risk, but we're willing to do more work promoting the currency for everybody in exchange.

3. Most of the more complicated gray-hat methods you mention for setting up networks are beyond our resources, which are tied up in casino operations and software development. I think there's an argument that our marketing funds should be redirected somewhat, but I'm bewildered by the range of options; I need a point man who'd work on this for revenue share. If you're that guy, or you know that guy and can supervise him to do the grunt work, name your cut. Right now, we have two programs: (a) Friend referrals for 100% of initial deposits up to $20, and (b) National management. National chiefs get a percentage of the total gross revenue from the country they represent, but are responsible for marketing and hiring in the country. These positions are only available to people who pass extensive background checks and who we think are the right fit for our company. This leaves a big huge hole where SEO and the actions you suggest should fit. Sapphire needs someone who can execute many or all of the above.

3. voucher2bitcoin is a good idea. Other middleman-exchange methods though, anything involving credit cards, MoneyBookers, Paypal, et al. where we bear the risk, are too much exposure for a site of our size. We can afford a $1000 chargeback a month, but we understand that ten $3 chargebacks in a row could destroy our business. There's a limit to how much risk we're willing to absorb on behalf of the rest of the Bitcoin community. Becoming the de facto bridge between credit cards and BTC is not a position we want to be in.

I'm getting the sense you're Russian; let me know if you have a kid over there and we'll set up something with rev shares. We've been looking for Russian translation on the site for a long time, and we could make the hits pay nicely if it's the right kind of traffic. We could also kick in for the kind of "it's easy to deposit" blogging you're talking about, although US-facing sites would get more benefit from that and we'd expect them to share their part of the burden.

Also, everybody do this: http://blackhatpwnage.com/index-site-fast-get-targetted-visitors-and-pagerank-boost/

It's an awesome way to rank your newly created sites, or old sites and get them page 1 quickly. I never use Facebook, Microblogging or twitter but you'd be surprised how much business you get from it.

Since I'm giving away ideas, another is to copy the site exchangezone.com but add in bitcoins, and the other alternative block chains. A site that exchanges every single digital currency that exists into another, through safe escrow, would be awesome. I have no time to run such a site, cuz other stuff I'm working on. Somebody do this. I promise a flood of customers :D

Whoever runs this could set everything up automatically, and take small percent of all escrow fees. Exchangezone.com did 2.5 million so far this year in exchanges. They're run by LR admins so limited to those transactions. Similar site is needed for BTC, but must be set up exactly like exchangezone (no USA hosting, domain, companies, operators, anything)

Or if you can afford the odd chargeback make your own voucher "Game CardShark Megaladon". This site decoy sells game cards which are 100% fine with Visa/MC policy. Apply to payment gateways with fast payout and good chargeback rates, like adyen.com or regional one's. Adyen has plenty of cash pay in methods that don't allow chargebacks in addition to Visa/MC. Now create a separate site that exchanges your game cards to bitcoins, WowGold, pecunix, anything. We all have an instant way to get BTC now and so do your casino customers.

The payment gateway dumps cleared funds in whatever Euro account you want 24hrs later, if you find a good one. Get an account at the same place MTGox or other major exchangers are and send them in bank xfers for bitcoin loading instantly at low fees since you're both using the same bank. You'd eat fraud, but if you're running a casino it's worth it for convenience.  

You make fees when customer buys voucher, then more fees when they convert it/sell to another currency (bitcoins), then on your casino, then when customers pay out because you're smart enough to build a network of bitcoin cashing out exchangers you can recommend to customers or sign agreements with existing one's. Profits, and you run the entire money chain

At this point eliminate any possibility of visiting the US (or flying in a US reg'd carrier, or boat) ever again. Seriously, no casino operator taking bitcoin should think of going there. Ever. Trust me some of my ex online casino employers are serving major time for simply being on an American Airlines flight WITHIN Australia (because fucking Aus deregulated their airspace, any carrier can fly domestic flights). They were arrested and deported at the behest of Nevada gaming lobbyists. Beware!

Another trick is to use pastebin.com
I made a few random sample pastebin's, on google.com search 'Where can americans gamble online' and it's already on bottom of page 2. Google 'Where can US players gamble online' and it's PAGE 1!

I did nothing, all I did was create the pastebin and click it 2x. It's advertising your site, I charge $0.00

It was on page 53 a few mins ago, and already ranked up. This might not sound impressive, but consider how much money Casino's dump into SEO companies to all fight for #1 page. I just made page 1 and 2 with 5mins effort using the most generic keywords. Add a tiny bit more effort and you're page 1 indefinitely, beating out Bodog's blackhat blog empire and others.

Now you pay SEO ppl and scrapers and blackhats to feed traffic to google searching for certain keywords and clicking the pastebin's and blogs you create with thousands of different IPs. Instant #1 page

If I were you, create voucher2bitcoin.com or something and take Ukash, PSC, Wallie, Paybycash and other vouchers. Then trade them with well known exchangers for cash into MtGox/Tradehill or your own accounts to buy bitcoins for players. These traders are online 24/7 and are verified on plenty of e-currency exchange boards. Just because PaySafeCard DE had to change all their pin#'s in the USA to non gambling pins doesn't mean you can't trade them with an exchanger into cash for bitcoins. These guy's pay out in Webmoney, LR, Sepa, technocash USD, WU, all sorts of methods. Find one and partner with them, and open a bank account in the same institutions they have. Effortlessly and inexpensively transfer money instantly with them and now you have a 24/7 site that can exchange vouchers into Bitcoin for all your customers.

Basically:

Enter amount:
Enter Voucher Number:
Enter Bitcoin Address to fill:
OR Enter exchange to fund (MtGox or Tradhill USD)

(your website calculates exchange fees and multiples by MtGox rate)

Receive this many bitcoins or MtGox USD:

Customer enters info, your site encrypts them and forwards to a 24/7 operation in Europe/Asia/Russia that's trusted who you sign a contract with. They exchange the pin# and give you technocashUSD or something else. Your script, or you can hire people to validate and manually xfer, then fills the desired address with bitcoins. They are gambling in 15mins, and you control all the money from start to finish taking all the fees for converting to BTC back and forth, gambling, and cashing out.

You should seriously create this, partly because I need such a site myself for biz and would direct everybody to it. Since you're a Casino can negotiate probably good fees with these exchangers. http://www.xmlgold.net/ is a bigtime exchanger for PSC/Ukash, they can build your casino a custom buy in page like they do for others.

This is very true. I can attest tha yahoo answers will put you in top of the SERPS with no sweat.
If you need a few hints about it I can help you. Or even automation.

Do you have an affiliate program? I might be willing to send some players in your way, or get you a full horde of internet marketers that would promote your sites.

+1

@ssaCEO

you're doing it wrong. you go on casino forums as a sock puppet and tell all the other American's how you, regular joe schmoe are able to gamble online at this amazing site you found by loading it with MtGox/Tradehill or whatever and then instruct the other forum users how to pay in. 'hey guy's i just cashed out $1k bitcoins through western union at wm-center.com was paid out in 15mins!' or something too for icing. tell everybody all about how you sent your poker winnings to bitcoin2cash.com or whatever and received anonymous cash in the mail. tax free casino winnings through bitcoin? prepare for the hordes of new registrations.

nobody needs to own a bitcoin client, just click withdraw on MtGox right to their pay in casino address. that's the beauty of bitcoin..3rd party loading is no problem because there is no central authority.

then you create gambling blogs written by you called American Gambling Blog or something, and fill it with info about how awesome it is to use bitcoin to cash out anonymously and how easy it is for traditionally banned American players to pay in with step by step instructions.

then you pay SEO people to rank those blogs on google.

then you write a ton of Yahoo questions on answers.yahoo.com like 'Where can American's play online poker?' and answer it yourself with another account 'By using Bitcoin' then link your blogs that also link your gambling site.

notice answers.yahoo.com is always ranked near the top of any search engine. this is just a scratch of the things you can do to promote a casino. remember 99.8% of people have no idea what bitcoin is regardless of how many tech articles you see in the news, it's up to you to create the dead simple step-by-step instruction page with screenshots on how to fund an account or contract an exchanger to do the payments for you like wm-center, technocashier.com, xmlgold....

I'm not so sure about this. We call the unit of currency "$" on our site, because its value is pegged to USD. But we could just as easily call it something else, or even denominate in BTC; the thing is, though, that we plan to ultimately accept other deposit methods side by side with BTC, and need a common currency. We picked USD because it's the easiest to trade in and out of and simplifies our accounting.

IANAL. But there are actually three legal issues here. The first deals with poker, which is only regulated under UIGEA. And UIGEA only regulates the use of banking instruments for moving money to play poker. Under it, a trading house may actually be accountable for translating funds into something a player could play poker with, but the poker site itself (whether it converts BTC to USD or something else, or is purely played in BTC) would probably not be violating any US laws. Not that I'd want to pay to test that theory in court, but I can't see what laws it actually would be violating.

The second issue deals with house wagering besides sports bets. This is regulated under a slew of state laws, and it's state Attorneys General who prosecute it. These laws don't care how the money's moved; many of them make it illegal to even "offer information about illegal gambling", "encourage illegal gambling", or "contributing to or participating in the income of a gambling business" -- I'm paraphrasing -- where "illegal gambling" is defined as any game of chance in which something is risked and something can be won. All three of those components (chance, risk, earning) are necessary under most of these state laws, and there's a (probably spurious) argument that abounds in the poker community, claiming that since poker is more than 50% decided by skill it doesn't fall under this rubric. Traditionally, poker sites haven't been attacked under these laws, but that doesn't mean the AG of Washington or Minnesota or Louisiana couldn't take a crack at it.

Third issue is sports betting which is clearly banned under the Wire Act, because when that law was written it was the only serious kind of wagering that was taking place over interstate phone lines. There's pretty much no question that anyone taking sports bets from the US is in violation of that statute, no matter what currency, chit or hash they're trading in, because this Act was written to specifically prohibit the placing of bets, not just the methods of funding them.


Agreed. Like the people who go to court claiming that Federal income tax is unconstitutional, we can make plausible, logical-sounding arguments all day long, and it doesn't make a whit of difference if the government's made up its mind to do what it's going to do. Actually, it provides a false sense of security. At the end of the day, if Bitcoin gaming houses start making real money out of the US, then law enforcement will find ways to bend the laws to go after them; and if they can't find a way to do that, they'll pass new laws.

To add to your point, dollar conversion on the sites, with bitcoin as a funding and withdrawal method, is probably the only thing that's going to make bitcoin based gambling take off. I think it's already a spurious argument to say that bitcoin based gambling is grey area, since it's easy to prove that it's readily exchangeable for fiat.

-Jonathan

The problem with conversion directly to dollars is you squarely take that 'gray line' area away of whether this is really gambling. You'd be no different then if you just directly accepted credit cards.

I think a lot of people are jaded by the three things when it comes to using bitcoin as a deposit withdrawal method:

1) Inconvenience - For years they were able to just pull out a credit card and bet

2) Bitcoin Volatility - To go from $30 back to $1 and stabilize a bit at $3 is an issue

3) Past Virtual Currency Issues - E-Gold and GoldPay  both failed miserably and were used frequently by US players. Also they were tied to dollars and bitcoin isnt.

I have faith , but there are a lot of challenges to overcome

Bill

I think the problem is literally that it's too inconvenient for them. There's no such thing as a typical gambler, but one thing they all want is to play immediately. It's an impulse. So they might come to the site and say, alright, how do I get these Bitcoins to play with? And then they get to the MtGox site and it looks like it was designed in someone's basement, and they're supposed to wire money, download a program, and it turns out to be this complicated tangle of things that takes days; and at the same time they're hearing all this FUD about Bitcoin on the news.

So the idea with Bitcoins for Christmas is, basically, to give people a reason to set up a trading account. Someone they know sent them $50 and all they have to do is follow a few steps to get it. Now they have the client, they have a trading account, and maybe even a few Bitcoins left over; and they know how to fund their account when they want to play, and they see it's not very difficult.

We've toyed with other ideas, like tying bonuses to opening a Tradehill account...but this seems like a better way. We just want to entice regular average Joe gamblers to download a client and set up a trading account. After that, it comes down to the quality of our product, that we hope will keep them coming back.

@ssaCEO

I think you are on the right track trying to to target the people who are currently gambling on other sites rather than just the bitcoin crowd. How is the feedback on the gambling forums, blogs etc? I'm surprised I haven't seem more press hits on how bitcoin and gambling are a perfect fit. There's been so many about Silk Road for example. Is the problem just that it's too inconvenient for the average gambler to buy bitcoins?
The bitcoins for Christmas is a nice idea, but doesn't help someone buy bitcoins. Maybe something like a Strike Sapphire branded Casascius coin that people could buy from with their credit card might persuade some people. Would it be possible to do something like make the bitcoins from the Strike Sapphire-Casascius coin available in their Strike sapphire account immediately upon payment but withdrawals would not be possible until they receive the physical coin - maybe a stupid idea with some flaw I'm not thinking about.

Anyway good luck and keep up the good work.

JRO, you make some very good points. There's undoubtedly a connection with the price of BTC, and undoubtedly the majority of our players have been miners and speculators. Having said that, we've been USD-denominated since day one; players in our system don't hold BTC risk until they withdraw. We're trying to target a non-Bitcoin audience. We have had a few people I know of actually download a Bitcoin client and buy Bitcoin specifically to play our games -- not very many, but some. Mostly the kinds of players who shop from casino to casino looking for high RTP slots. That's really the market we'd like to reach. Ultimately, once a player is up and running with a Bitcoin client and a trading account, it's not harder to use than any other e-wallet. Players get a Moneybookers account and go shopping for casinos that take MB. By comparison, Bitcoin sites can offer better odds, because there's less overhead; that's something players should be aware of. I don't expect savvy gamblers to get into Bitcoin just because it's cool.

Our position in Europe is difficult because it's gotten harder to fund or defund a trading account from the EU, and at the same time there are tons of casinos taking Moneybookers, Paypal, Visa/MC, who are our direct competition. But this should be an easy sell for the US-facing sites, because all payment options besides Western Union and bank wire are off the table in the States and there are millions of hungry poker players and sports bettors there. These players are willing go the extra mile ...people will do anything that gets their money to places like Bodog, BetPhoenix, et al. Billions of dollars a year are wired to banks in the Caymans, or Western Unioned to Costa Rica. The scale of bets wired from the US dwarfs the Bitcoin economy.

We hope we can position Bitcoin as a standard casino deposit method, whatever currency the end accounts are denominated in; and that the conversion of US players will have a knock-on effect to player adoption worldwide.

I have a theory.

I propose that there's a strong correlation between price and the volume of players. As the price declined from July on, Gambling site volume increased.

Imagine that you are a miner or speculator facing increasing losses on sunk costs for your mining rig(s) or investment, and you are desperate to maintain a dollar value, one of the only effective 'strategies' available (other than day trading) is to try your hand at various bitcoin denominated gambling sites.

With price falling back in line with reality (~$2.80 - $3.80), the losses have been realized fully and many of the weak hands have exited both the speculative and mining bubble. Network difficulty has decreased. 30-40% of miners and speculators that entered the market in the past ~6 months have disappeared.

These speculative bitcoin users were your main user base. They were equally as desperate as a welfare mother at the penny slots on the 27th of the month.

Virtually none of your users purchased bitcoin with USD/EUR/GPY for the purpose of gambling.

Now we're seeing consolidation and cold, unfeeling free market forces at work.

Problems with bitcoin denominated gambling sites have little to nothing to do with reputation. The biggest problem is that the snake has eaten its own tail, the users you had have taken their loss and moved on.

Normal people see the price decrease and volatility of bitcoin as a huge problem.

Are there any solutions? I think so.

First off, stop thinking in terms of bitcoin. You're not going to attract people to play bitcoin games just because bitcoin is so cool.

Convert bitcoins to USD in user accounts, and watch your volume increase. Make your sites USD/EUR/GPY/YEN friendly, guys. A user sends their bitcoins, and you sell them at MtGox/TH for the fiat value, less some % for exchange. Alternatively, use Bitcoinica to hedge against loss when giving USD/EUR/GPY/YEN value to users at a locked rate.

99.9% of the world thinks in terms of hard fiat currencies. Find a middle ground, make bitcoin a convenient funding method, and watch your games and services take off. If price stability ever happens, those users will start to treat bitcoin more and more as a convenient digital currency, useful for the purchase of products and services directly.

Bitcoin isn't going to stand on its own until a number of years have passed.

Anyways, good luck to all of you.

-Jonathan

I'm glad to hear the support from other sites. We'll be in touch soon.


I'm glad you like the site. But are you saying Bitcoin's only purpose is breaking US law? Believe me, I realize full well that we're sitting on a killer app, and if we wanted to turn the tap on the US market we'd be converting new users to Bitcoin day and night, and stealing clients from Bodog 24/7. But Silk Road is a bunch of jackasses waiting to get busted. Calvin Ayer lives in a fucking fortress he's not allowed to leave. We're a real business that pays corporate taxes and plays by the rules. We travel in and out of the US. That's not an attitude problem, it's a straight business decision. We sacrifice the American market because it's not worth ending up on the wanted list. I think the US law is a bad law, it's wrong, and I have no beef with people who are finding ways around it. I hope things like Bitcoin help it become so unenforceable that it has to be overturned. I don't live there though, and it ain't my responsibility to save Americans from their screwed up government. The two things I personally care about are building the best site possible, and keeping us independent from the majors. I turned down three attractive buyout offers in the last six months from casinos in CR, IoM and Malta, just to keep us free to do what we're doing, because I think our platform and games will catch on and be worth more than six figures if we play it right. My business partners and our lawyers don't think opening an underground betting shop in America is a worthwhile tradeoff for all that hard work, and I agree with them. Either way, they have the majority vote. Our decision is not to screw with the USDOJ.

So my statement against American law, if I have one, is that I refuse to engage it. My site's based in Costa Rica, I live offshore, and we don't take US players. It's a pretty slow, shitty game experience on an .onion router, and that's not our objective. You don't see us on any hidden wikis. There's no point. We want to run the best gaming site possible, do it legally so we don't have to look over our shoulder, and be better than the majors at what we do, while remaining totally independent. We're trying very hard to walk that line using the tools available. Bitcoin is a great tool for keeping ourselves out of the reach of corporate payment processors. Whether you think we're an asset to the community or not, it's not our mission to help your cause to free America. We're busy enough trying to get people interested in Bitcoin all over the place. Once that works out, you're free to open an .onion casino yourself and ride on the wave of new players.

Sure, they could have onion addresses as a fallback, but the average Joe does not use Tor. You don't need government involvement to earn a reputation for fair gambling. As a user, I think a gaming association would help a LOT. Someone has to tell newbs where is safe... Who better than those with a long-term stake in the industry's reputation?

tl;dr

I like gambling, your website and feeling but not your attitude. You wanna play by the rules and make a business ? i think you should better leave bitcoin alone and keep with the "traditional" payment processors. Want to make a statement against laws approved in detriment of all of us, better get an .onion address and start doing real business on par with silk road. Just my opinion

I absolutely agree.  We all share a common benefit in having casual gamblers or the everyday Joe look into using bitcoins to gamble. 

I think it would be a wise idea to setup a friendly association like you mentioned where we can all chip in on advertising or awareness to the everyday person.  Right now the main and only driver of the value in bitcoin is silk road.  Gambling could be just as big of a driver if not much more.  It would be nice to also get support from the rest of the community on this as well. 

So yes, we would support such an organization financially and would be willing to take a leadership role in its formation if enough of you out there support it.

We've had our busiest week since the SuperBowl (yeah, we've been around that long). Might be recent ads we've put up, but I certainly don't see a slowdown.

I think trust is a major factor - people think all of these sites are scams. Unfortunately that has been the case so they don't want to be burned again. Trust is earned over a long period of time and we're lucky to have a great group of long-time regular players. But I can imagine it is very hard for newer sites to get traction.

I'm open to any ideas as far as gaming association, anything to bring a bit more legitimacy sounds good, feel free to include me.

Look. No one's reading these threads.

On a basic level, we all got into this because in some way, we weren't able to run standard casinos with Visa & Mastercard. We all know what that costs is well outside the reach of a small startup team.

You all know there's been a decline in traffic the last few weeks, that's been accelerating over the past few days. No one's spending Bitcoin. You also know, if you're in this business, that Bitcoin is the only thing making it possible for you to run your business at all. It's literally the only free space left to play in, where no bank or payment processor can tell you what to do; where you don't need to give up equity in your company to bootstrap it; and (for most of you) where you don't have to care what governments pass which laws.

We're with you on two out of those three, and we can see an argument for the last one.

Rather than jumping ship one by one, let's figure out how to turn Bitcoin into a payment standard on par with Paypal or Visa. There's obviously a market -- more in the US, but I think it'll increase everywhere. This is why we launched BitcoinsForChristmas.com. We won't be the only beneficiaries of that site; it's aim is to help get the whole economy pumping again. Look, there are two things going on here:

1) Your regular Bitcoin user isn't a gambler. He likes new stuff. He liked your site when it was new. But poker players and gamblers don't wade through this much garbage to deposit at Bodog, so why bother with us? We need these coins in the hands of average players -- not average Bitcoin users.

2) Bitcoin itself is resting on a knife's edge between a group of believers who understand its potential, and a mass of idiots who follow the last thing TechCrunch wrote. We need to broaden our base, simplify, and start dealing with this like professional gaming outfits rather than rag-tag, fly by night, might shut down tomorrow websites.

Andrew Bitcoiner had brought up the possibility of a Bitcoin gaming association; I'd like to see that become a reality. I also think we need to pull together separately from the rest of the Bitcoin world to say -- look, this is a viable payment method. Use this instead of Paypal and you get more for your money. We don't pay vig to the processors, and we pass that savings on to you. No one who gambles online should be gambling with anything other than Bitcoin.

I've spent enough time hanging out on Seals and BTCOnTilt to know, this is a uniform suffering that's going on right now. We need to pull together before we fall separately. Sapphire can't condone taking US bets, but we can work with you to drive the traffic you want, if you can help us build the currency up as a whole so there are more players for everybody. This is an open call. Work with us; let's just suspend competition for the moment and deal with the common problem.

Anyone who has ideas is welcome to contact me day or night. Here, or through [email protected]. I want to hear what you think.