Sometimes a story about newfangled technology doubles as one about old-fashioned neighborhood gumption. When The D and the Golden Gate became the first casinos to accept Bitcoin (albeit only for non-gaming purchases) it was a sign of the way Downtown Las Vegas, by dint of geography and necessity, is pushing the boundaries of innovation in the casino business.
Bitcoin, in case you missed it, is an open-source peer-to-peer system of exchange. Unlike traditional currencies, which are issued by national governments, Bitcoin is completely decentralized. It offers instant, low-fee transactions, with no chance of credit-card charge-backs—seemingly a godsend for merchants, and potentially a great convenience for customers.
Derek Stevens—owner of both casinos—chose to accept Bitcoin as an outgrowth of what has been a notably customer-friendly approach. “I’d been following Bitcoin through the financial press,” Stevens says, “watching as it gained in both valuation and popularity. Every now and then, I’d see someone at the Longbar ask if we accepted Bitcoins. About six months ago, the frequency picked up, and three months ago it became almost a daily occurrence. So our management team looked at it from a business perspective.”
Stevens and his team couldn’t come up with any good reason not to accept Bitcoins for non-gaming transactions (more on that distinction later). With the influx of young, tech-savvy entrepreneurs into Downtown Las Vegas, Fremont Street makes sense as a Bitcoin hot spot. Tony Hsieh’s impact on Las Vegas, it seems, is already manifesting in unexpected ways.
Of course, the real test for Bitcoin in casinos will be whether regulators allow its use for gaming purposes. That’s begun to happen worldwide—a few online gaming sites, such as SatoshiDice.com (named for pseudonymous Bitcoin inventor Satoshi Nakamoto), transact entirely in Bitcoin. An Ars Technica look at the site early last year reported that it pulled in nearly $600,000 in winnings over seven months in 2012.
With global gaming numbers usually reckoned in the billions, that’s still a niche market, but Stuart Hoegner, an attorney at Toronto-based Gaming Counsel, believes Bitcoin may yet become a driving force in commerce, gaming included. “It’s the biggest innovation in money,” Hoegner says, “since the invention of money.”
Hoegner is quick to point out that Bitcoin has some hurdles to clear, particularly when it comes to gaming. It needs to be integrated into properly functioning anti-money-laundering and counterterrorism systems, he says, and regulators need to get comfortable with the new currency.
He points to Vera & John, a Malta-based online casino that has begun accepting Bitcoin for deposits, alongside traditional financial instruments like credit cards and e-wallets, as the direction that, regulation permitting, the industry might head.
But, as Hoegner suggests, many regulators are leery of Bitcoins being used in money-laundering schemes. But that’s not necessarily a deal-breaker. Although Bitcoin is a crypto-currency, it is not anonymous; all transactions are a matter of public record and can be viewed by anyone, including regulators and law enforcement. In other words, Bitcoin leaves a paper trail (an electronic one, at least), which investigators could use to track money laundering or other potential financial crimes.
Although Bitcoin sounds like a viable currency for gaming in theory, there are some complications in practice. Right now, Bitcoin is extremely volatile; in the past year, the value of a Bitcoin ranged from less than $70 to more than $1,200. After news of a potential software glitch earlier this month, prices temporarily plummeted, and a rash of cyber-attacks have given markets cause for cold feet. One of the world’s largest bitcoin exchanges, Tokyo-based Mt. Gox, went offline this week after reportedly racking up catastrophic losses. Plus, as transparent as Bitcoin may be, it does not yet satisfy Nevada regulators.
“I don’t see us allowing Bitcoin to be used for gaming purposes in the near future,” Nevada Gaming Control Board chairman A.G. Burnett says. The board may be issuing guidance to the industry on the topic soon, he says.
While that seemingly closes the door—at least for now—on Bitcoin as a major gaming player, the currency has already made a difference at The D and Golden Gate.
“We’ve had far more transactions than I would have guessed,” Stevens says. “I’m enthused to see it take off.”
Over the next few months, we’ll see if other gaming operators—and, more importantly, regulators—share that enthusiasm.