Could Cryptocurrency Play a Bigger Role in U.S. Gambling?

There is no difference in the probability if staked in USD or Bitcoin. The fallacy is that people think that faster payouts or decentralized transactions have better betting outcomes. ^[1]

Cryptocurrencies and Pricing Logic

The odds of sportsbooks are dependent on the implied probability and vig. If you bet USD 50 at -110 odds on the NBA, your expected loss is the same as if you bet 0.005 ETC at -110 odds on the NBA. The Sportsbook's percentage, which is generally in the 5–10% range, is not dependent on the payment method. Due to the exchange-rate risk, crypto players hold double volatility – of the game and of the assets.

Why Bettors Believe that Cryptocurrency is a Game Changer

Crypto’s faster withdrawals give the impression of an edge when, in fact, probabilities are constant. When crypto prices are going up, there's a recency bias, and bettors think that they will make money from both their bet and the appreciation of their assets. This is further reinforced by the hype around social media, which causes some to think decentralization means less control for the Sportsbook, but that isn't the case.

Where the Logic Breaks

If a UFC prop bet is placed on a fighter to submit at +300, the probability is implied to be 25%. When staked in Ethereum, the bettor has to deal with two uncertainties, the fight result and coin price fluctuation. The payout can be lessened by the sudden drop in Ethereum's value, even if the bet is won, if it drops by 10%. 

Sportsbooks also factor in the efficiency of the market. The NFL totals are based on the sharp action and public bias, NOT the currency. In NBA markets, same game parlays continue to multiply the odds, which increases the Sportsbook's spread, whether the bet is in dollars or bitcoins.

Economics and Regulation

Same-game parlays are not impacted by cryptocurrency, as the digital payments have no impact on compounded probability structures. With live betting, quicker crypto deals can match up with in-play betting, but the volatility can affect the payouts. Operator economics remain steady, as well, with the average U.S. sportsbook holding 5-10%. 

Lastly, there are sharp bettors who concentrate on mispriced odds and not the method of payment, which implies that crypto is transactional and not analytical.

So far, regulatory oversight is the only obstacle. While offshore sportsbooks might be into cryptocurrency, regulated U.S. sportsbooks are more concerned about abiding by banking regulations. 

Cryptocurrency Volatility

Academic studies have shed light on the additional risk of gambling in the crypto world due to volatility. A $100 wager on a total line for the NBA could be affected by variance, as well as the price of Bitcoin. Bitcoin's daily volatility has been seen to be anywhere from 4-5%, which means that payouts can change substantially in one game window. ^[2]

Another Ethereum market analysis shows that transaction fees and price volatility can lead to a loss of bettor confidence. The volatility of value detracts from crypto's reliability as a stable betting currency, whereas it provides speed. ^[3]