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Metaverse and Casinos: Rolling the NFT Dice

From the early days of humanity, we always liked to play gambling games . Today, are NFTs the new frontier for these games?

knack ·  · 08/30/22 ·  4 min · 

Beginner

Humans have been playing gambling since at least 5000 BC when sheep knucklebones were used as dice by the Sumarians in ancient Mesopotamia, with the first familiar six sided dice discovered in Iraq and Iran around 3000 BC. 

From those early times we have endlessly looked for new ways to gamble in spite of any prohibitions. Today, this tendency has been propelled into hyper speed by the impetus of new technologies, with NFTs being the new frontier. The data proves the pattern: in 2021 the market size of the global online gambling and betting industry was $61.5B USD. According to Statista, that market will grow to $114.4B USD by 2028 for an increase of more than 86 percent.

When we see that Sorare, an NFT fantasy football game platform, raised $680 million USD in a Series B funding round, it’s clear that non-fungible tokens will be part of that growth. 

Sports Betting

Paris-based Sorare presents an NFT-driven sports card platform where baseball and football fans can build teams from the NFT cards they’ve collected. The first cards were minted on the Ethereum blockchain. Today, they use a Starkware sidechain to reduce the transaction fees and scale the possibilities of the game. A player’s teams can in turn be entered into fantasy competitions that provide rewards paid out in ETH. 

Unfortunately for the brand, Sorare has run afoul of regulators in Great Britain who claim that the business’ operations are unlicensed and constitute unregulated gambling. Since the UK Gambling Commission’s initial statement in October of 2021, there have been no new announcements from the regulator. Sorare disputes the UK regulator’s claims. To a casual reader, it may seem like the Gambling Commission is over-reacting. However, Sorare has most of the world’s top 100 soccer teams under contract and has sold over $130M in the space in 2021 which would seem to indicate otherwise.

We want to make a distinction here that may be evident to those more experienced in the realm of blockchain: NFTs and cryptocurrencies are not the same thing. Therefore, receiving payment in the form of ETH is often very different from receiving an NFT. In brief, and this may be disputed by some in the crypto community, cryptocurrency can be considered a security as the Securities and Exchange Commission (SEC) defines the term.

This is because cryptocurrency is a means to hold, gain, or transfer an investment. NFTs, on the other hand, can simply offer utility or be collectible. Without the indication of a return on investment for a common purpose (see the Howey test for assets) it can be more difficult to decide whether an NFT is an asset for legal reasons.

Accordingly, we recommend that readers consult our services to help understand their NFT portfolios better.

Metaverse Casinos Controversies

While fun for some folks, casinos have historically been associated with a variety of illegal activities. That trend has manifested in new ways thanks to Flamingo Casino Club and Sand Vegas Casino. Each project represents much of what can go awry in tech-forward, online ventures. These two instances exemplify the need to understand the fundamentals of the crypto and NFT space before investing.  

Flamingo Casino Club

Flamingo Casino Club does not exist in the metaverse or real world. There is no connection between it and the Flamingo Casino in Las Vegas, as the project claims. It is, according to regulators from the states of Texas, Wisconsin, Kentucky, New Jersey, and Alabama, a scam. The owners provide no information as to their location or identities and the digital trail leads back to an IP in Russia, which regulators say lowers the chance that investors can recover their funds significantly.

Sand Vegas Casino

The Sand Vegas Casino, apparently based in Cyprus, has angered regulators in Texas which is quite an achievement! The state alleges that this casino has traded in unregulated securities. This is because the club forecasted profit-sharing from its Gambling Apes NFT collection. As a precaution, OpenSea halted trading of the NFTs in the Spring of 2022.

Legitimate Use Cases for Legitimate Casinos

Real World Possibilities 

Real-world casinos have been earlier adopters of tech such as facial recognition and big data. These technologies allow them to better serve customers, limit fraud, and respect folks who’ve banned themselves from establishment premises. NFTs might be the next complementary items bestowed on VIPs and even casual visitors. The prospect of winning a $200,000 Ape might keep even your modest player at the table a bit longer. Likewise, NFTs could serve a valuable role in the secondary ticketing market as we’ve discussed in another article. In fact, it’s surprising that casinos have yet to collect royalties on tickets thanks to the smart contract functionalities of non-fungible tokens: if they loved the money from the first time a ticket sold, why not the second or third?

Metaverse Projects 

While it’s hard to gauge the legitimacy of a metaverse casino across all the jurisdictions where one can be accessed, the ICE Poker virtual casino in Decentraland seems like a popular operation if nothing else. Thousands of visitors play poker daily in the casino run by Decentral Games, even accounting for 30% of Decentraland’s daily users according to Markets Insider

Zed Run is a popular NFT game on the Matic network. Like the cryptokitties of yore with more gaming potential and interaction, the horses in NFT form each possess their own DNA. This DNA gives them their distinct value for the sake of racing and breeding. Their low floor price combined with the low entry cost for most races makes this project a viable entry point for learning about NFTs via participation.

The Next Roll of the Dice

Looking for more use cases? We’ve got your back at our NFT Academy. And for our readers who enjoy a flutter, what do you see coming up next in NFT gambling?

Need help understanding the NFT ecosystem? Explore the NFT Academy
#Metaverse Casino

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