April 15, 2011 is a day known in the gambling industry as Black Friday. On this day, the U.S. Department of Justice shut down three major poker sites popular among U.S. residents, as well as accusing 11 people of bank fraud, money laundering and illegal gambling. Gaming accounts were frozen, leaving users without their funds. Many U.S. poker players had to move to other countries, taking their families with them to continue bitcoin gambling.
Michael Hajduk spent about $20,000 and a year of his life building his own poker room, Infiniti Poker, when the gambling market in the United States exploded. “It was like dropping a bomb,” Hajduk says. But he didn’t really care, by and large. Infifnty poker, based in Colorado, like other newcomers to the business, plans to accept bitcoins. The online currency allows U.S. citizens to bypass a host of laws regarding the transfer of funds to the accounts of gambling companies.
“Because we use Bitcoin, we don’t use U.S. banks – it’s all peer-to-peer here,” Hajduk says. “I don’t believe we’re doing anything wrong. “Michael Hajduk According to Michael Hajduk, Infiniti Poker will accept credit cards, bank transfers and other forms of payment. But U.S. residents will only be able to fund their accounts with bitcoins. This currency is not subject to U.S. laws regarding the gambling industry, as well as has a shorter withdrawal time. Bank cashout transactions can take up to 12 weeks while Bitcoin users can get their funds in less than an hour.
GamblingCompliance, which monitors the global gaming industry, estimates the online gambling market in the United States from 4 to 7 billion dollars. On Black Friday, U.S. players had about $100 million frozen in their gaming accounts. Only recently have people been able to access their funds on Full Tilt Poker. Michael Hajduk is attracted to the way bitcoins are stored – on players’ own computers: “At the end of the day, the government can’t freeze your account because they don’t have access to Bitcoin” It’s also unclear how the government will go after Bitcoin gambling.
“Bitcoin poses a new challenge to financial authorities,” says Martin Williams, Asian editor of GamblingCompliance. “I suspect it’s going to be like a game of catch-up,” Brian Micon The Justice Department declined to comment on the matter. Right now, of the popular poker rooms, Switch poker and SealsWithClubs accept bitcoins, with the latter only working with cryptocurrency. As Brian Meacon, creator of the NeverWin forum, DonkDown, and head of SealsWithClubs says pro player, “The revolutionary idea behind Bitcoin is that this currency is backed by crypto, not the government. Mathematics, not humans, rules this system. Bitcoin is the most amazing currency created by science and man” Seals With Clubs That said, there are also risks. Hackers have stolen bitcoins from various organizations in recent months, such as Vircurex and Cryptostocks which were recently stolen using an exploit. Also if bitcoin wallet is lost all funds are lost, for example if hard drive crashes if there is no backup. One user lost 50,000 bitcoins this way, says Peter Vessenes, chairman of the Bitcoin Foundation, an organization that helps develop and promote the virtual currency.
“It’s still pretty raw technology,” says Gavin Andriesen, principal investigator at the Bitcoin Foundation. “Obviously Bitcoin was developed by geeks for geeks. It’s still not too easy to use Bitcoin, but it’s getting easier every day.”
Bitcoin gambling sites
Meanwhile, Bitcoin-related gambling sites keep popping up. Eric Voorhees, BitInstant’s director of marketing, helped design SatoshiDice, a site hosted in Ireland and owned by an unknown investor. It was launched in April and since then the site has taken in about $15 million. According to unofficial reports, this casino had revenues of $400,000 in 2012. SatoshiDice is careful to keep everything in bitcoin. This is a basic condition for the site’s legal status.
“It’s better to keep the site completely unconnected to the outside world,” says Voorhees. Strike Sapphire When it comes to allowing Americans to play poker and casinos with bitcoins, not everyone will be as bold as Hajduk and StaoshiDice. Josh Strike, who founded the bitcoin casino Strike Sapphire, based in Costa Rica in 2011, is confident that Americans won’t be able to access his game.
“I’m an American myself and the guys helping me are lawyers and co-owners I’ve known since high school, they’re Americans too. I don’t want to get anyone in trouble.”
Opinion about new currency
For now, the only real disadvantage of the system is the unstable exchange rate. But Forbes financial columnist John Matonis thinks rate fluctuations are normal for such a new currency.
“The chart is similar to the behavior of the price of silver, which went from $50 an ounce to $4 and then jumped back to $50. That said, no one is saying silver isn’t money.” According to Meacon, it will be hard for poker rooms to ignore Bitcoin. “It’s only a matter of time. Sane companies are already interested; for big companies, bitcoin isn’t of interest yet because it’s not quite ready yet. For smaller companies, however, it’s perfect.”