The United States Supreme Court just opened the door for largescale legalized sports betting in the United States. That decision will greatly increase interest in; and demand for, wagering-related cryptocurrencies and blockchain products.
Contrary to media hype the Supreme Court did not legalize online gambling in the United States. The Supremes struck down a federal law called the Professional and Amateur Sports Protection Act (PASPA); which banned betting on professional sports in all states except Nevada, on 14 May 2018.
The decision, Murphy vs. National Collegiate Athletic Association (NCAA) gives states the ability to legalize sports betting within their borders. Cross-border online gambling is still banned by another federal law called The Wire Act. Some states like New Jersey; the Garden State’s Democratic governor Phil Murphy is the plaintiff in the case, expect a tax windfall from legalized sports books at casinos.
All Murphy v. NCAA really does is stop the federal government from banning sports betting in specific states. Uncle Sam still has the power to ban sports betting in all states, and interstate sports bets are still illegal.
Is Online Sports Betting now Legal in America?
Basically, states now have the power to legalize sports betting via legislation or ballot initiatives. The problem for online entrepreneurs is that it is not clear if digital betting would be allowed.
Sportsbooks would still violate The Wire Act; and possibly other federal laws, by taking bets across state lines. It should be possible to create apps that use a phone’s GPS (Global Positioning System) to detect a device’s location to facilitate wagering. The app would authorize real bets – if the phone was in an area with legal sports betting.
Blockchain might facilitate betting by providing a high level of encryption for security. Ethereum smart contracts would make it easier to make enforceable wagers and to bar bets from states where bets are illegal. Cryptocurrencies will make bookkeeping and taxation of sports wagers easier, building a blockchain platform that would automatically collect a tax from each bet or payout is simple.
Taking sports bets in the United States will still be very difficult because operators would need a separate book in every state that takes bets. Specific apps or blockchain platforms and possibly cryptocurrencies might be required for every state.
What Murphy v. NCAA Means for Cryptocurrency Wagering
There will be no nationwide sports betting, and action in a lot of areas will be limited even if it is legalized. Would anybody really bother to open a sports book in Vermont (population 623,657) or Wyoming (population 579,315)? Such operations would not make enough money to be worthwhile.
Despite that there is enormous potential for profit from sports betting in America; particularly if states like California (population 39.54 million), Florida (population 20.98 million), or New York State (19.85 million) were to legalize it. Four things about American sports wagering are clear from Murphy v. NCAA they are:
- Sports betting can be big business in the United States; The New York Times estimated the value of illegal sports wagers in the USA at $150 billion a year. The potential market for such betting is huge; there were 57.4 million fantasy-sports players in North America in 2016, according to an Ipsos Public Affairs poll commissioned by the Fantasy Sports Trade Association.
- Building sports betting markets in the United States will be expensive, messy, and complicated.
- There will be serious efforts to ban all sports betting in America. The NCAA will probably lobby Congress to amend the PASPA to ban sports wagering in every state which would be Constitutional. The ridiculous fear behind this will be that betting will corrupt collegiate sports, which are already one of the most corrupt institutions in America.
- There will be state; and potentially federal efforts, to prosecute online and blockchain sports books that try to operate on American soil.
Which Cryptocurrencies might Profit from American Sports Betting?
The main beneficiaries of Murphy v. NCAA appear to be lawyers who stand to make a lot of money from sports betting litigation because of it. Yet there are a few cryptocurrencies that might increase in value because of the decision.
A few blockchain tokens that might profit from American sports betting include:
Unikoin Gold (UKG)
This ER20 (Ethereum) interface cryptocurrency is issued by a Washington State-based blockchain sports book called Unikorn. Unikorn takes bets on esports; which is legal in some US states, but not across state lines. Transactions are made in a digital token called Unikoin which can be converted into UKG and from that token into Ethereum (ETH).
It would be a simple matter to add sports betting to Unikorn. That might be why controversial Dallas Mavericks owner; and Shark Tank loudmouth, Mark Cuban has been investing in it.
Unikoin Gold (UKG) has some value; it achieved a coin price of 19.5¢, a Market Capitalization of $27.678 million, and a Market Volume of $879,304 on 16 May 2018, according to Coinmarketcap. There was a Circulating Supply of 141.272 million UKG out of a Total Supply of One Billion UKG on 16 May 2018.
Gnosis builds apps for a kind of pool called a prediction market. In a prediction market, people place bets on the outcome of an event such as an election. That technology might be easily applied to sports.
Bets would be in and winnings paid out in the Gnosis token. Gnosis is an ERC20 (Ethereum compatible) that is integrated with the Bancor Protocol to ensure liquidity.
Gnosis (GNO) achieved a very high Coin Price of $91.52 on 16 May 2018 because it had a very low Circulating Supply of just 1.104 million, Coinmarketcap data indicates. Gnosis achieved a Market Cap of $101.94 million and a Market Volume of $760,296 on the same day. Gnosis’s potential Coin Price is theoretically very high because it has a limited Total Supply of 10 million GNO.
Stox is supposed to be a blockchain predictions market platform. The platform will be used to build many different predictions markets many of which would undoubtedly be for sports.
Stox has a number of markets up and running right now; including a few pools on NBA, FA, Europa League, European Basketball, and Champions League games. Stox (STX) is an ERC20 cryptocurrency and it is compatible with the Bancor Network.
STX was cheaper than GNO it had a Coin Price of 54¢ and a Market Capitalization of $23.271 million on 16 May 2018. That led to a Market Volume of $1.533 million on the same day. That was achieved on a Circulating Supply of $42.939 million STX and a Total Supply of 58.005 million.
The big cryptocurrency winner in sports better will probably be Ethereum (ETH). Most of the projects designed to cash in on legalized sports betting will run on the Ethereum blockchain because it is the industry standard.
Ethereum-based tokens made up 91.2% of the total cryptocurrency Market Capitalization on 12 January 2018, AminCad estimated on Medium. Ethereum-based tokens’ market share grew from 73.8% of the cryptocurrency Market Cap on 2 July 2018.
Ether or Ethereum (ETH) had a Coin Price of $696.40 on 16 May 2018. That led to a Market Capitalization of $69.272 billion and a Market Volume of $2.576 billion on the same day.
Ethereum was the second largest cryptocurrency with a Circulating Supply of 99.472 billion ETH tokens on 16 May 2018. That means there will soon be one trillion ETH coins in circulation. Another advantage to Ethereum is that it can be easily sold and used for some online transactions.
If there is a dark horse contrarian investment in cryptocurrencies for sports wagering it is the Bancor Network Token (BNT).
Bancor is a liquidity network which means it is supposed to ensure cryptocurrencies are easily convertible and backed by cash. Since sports betters will demand a quick payout, Bancor’s services will be in demand.
Stox (STX) and Gnosis (GNO) are already members of the Bancor Network and utilizing the Bancor Protocol. The protocol is supposed to make it easy to convert one token into another using Bancor. The Bancor Network is a great place to look for other cryptocurrencies that might make money from sports betting.
Bancor (BNT) achieved a Coin Price of $4.49 on 16 May 2018. That led to a Market Capitalization of $231.334 million and a Market Volume of $17.764 million on the same day. There was a Circulating Supply of 54.497 million BNT and a Total Supply of 75.573 million BNT on the same day.
One thing is clear nobody should expect instant fortunes or profits from legalized sports betting in America. As with marijuana legalization, it will take years, and many political and legal battles to create any sort of market for legalized sports bets in the United States. Investing in altcoins like Ethereum (ETH) and Bancor (BNT) which have many other uses is the safest means of speculating on legalized blockchain sports wagering’s future in America.
Disclosure: your friendly neighborhood blogger owns a small position in Ethereum (ETH).