Fintech and Online Casinos – Exploring the Link

Author: Matthew Haynes

"Cryptographical solutions might with great propriety be introduced into academies as the means of giving tone to the most important of the powers of the mind". As quoted by economic philosopher Edgar Allen Poe in the early 19th century, certainly the many decades that have followed and the technological advancements prove that the luminary was ahead of his time.

Sophisticated strides forward in technology have yielded many life-changing innovations, not least of which have been generated through automation and mechanization, the initial foundations paving the way for crossovers between different industries due to the versatility of infrastructure.

The late 1980s proved to be a revolutionary concatenation that provided the springboard for the creation of new, essentially micro-industries, many of which are now considered crucial in the overall global economy. Of course, this was the internet, ideated and developed by Bob Kahn and Vint Cerf in 1983, before Tim Berners Lee tweaked the concept to launch the World Wide Web (WWW) in 1989.

During the mid to late nineties, gambling companies realized that the internet could be fundamental, recognizing significant growth potential over the long term. Many traditional gambling companies developed an online asset, with these eventually transitioning into their main source of revenue as the internet became more widely available and affordable.

As a result, it also prompted the launch of many new gambling companies whose purpose was to operate solely online, as a combination of astute research and intelligent foresight.

Suddenly, following the turn of the Millennium, online gambling had transformed into a major standalone industry, the eventual demand proving the visionaries right.

Technological advancement has been key to the evolution of the online gambling industry over the past two decades. Related industries have all played a part in giving it all of the tools it needed to position itself as one of the biggest growth sectors in the world. Developments in telecommunications turned out to be an almost accidental coup for online gambling.

In 2010, when Apple improved their smartphone significantly and then other companies followed, with similar enhancements, one of the biggest differences was how much more improved the internet and browser experience was for the user. Almost synonymously, online gambling companies realized that such a transition could be a masterstroke, forecasting a surge in mobile visits to their site.

What came next was a gamble that more than paid off. Online gambling companies adopted a 'mobile-first' approach to their websites, making sure that their sites were as user-friendly as they could be for visitors, while some even developed unique mobile applications.

Such a scale was a significant leap for the online gambling industry. What was about to follow changed the landscape forever.

Emergence of Fintech, Integration with Mobile and Influence on iGaming

Despite PayPal being founded in 1998, it wasn't really until over a decade later that the 'fintech' (financial technology) industry started to "break ground" - effectively, no one really knew what it was or even what it meant, however, it wasn't until the 'mobile revolution' when we began to witness the significance.

The iGaming industry has steadily enabled the fintech startup companies (Figure 1) to flourish, with more and more emerging over the years and an increasing number of iGaming sites onboarding fintech payment methods.

With the likes of Skrill and NETELLER available as alternatives to PayPal - particularly European-based sites offering these, as well as the increasingly popular ApplePay, players are now discovering the incredible convenience of being able to enjoy their iGaming experience, using their smartphone, with more payment options on offer.

Fintech, telecommunications, and iGaming are three sectors that essentially have enabled scale beyond all initial expectations, each one effectively overlapping and providing just as many benefits to the other.

Around the globe, multiple regions are leading the way in the world of fintech, perhaps unsurprisingly, those countries with the most resources at their disposal being the leaders. However, there are certainly many emerging markets in this industry, a lot of which are coincidentally (maybe?) where online gambling is also on the rise.

It may not come as any great shock that the US has the crown when it comes to the fintech space, with San Francisco and New York being the two cities that have the biggest influence on this scene, with multiple innovative companies and easy access to the brightest minds.

Not far behind is the UK, which has become a technological hub over the last couple of years. However, UK online casinos have also been a leader in the online gambling industry for well over a decade, so it is easy to see the synergy between the two sectors.

Those fintech ecosystems that are shaking up the global status quo are likely to have just as big an effect on the online gambling industry, with these territories already having an impact. The likes of Brazil, India, Mexico, and Argentina are all making ambitious plays in the fintech world, though they have also regulated online gambling in recent years.

Malta is also one to watch. The European hub for online gambling, also attracted multiple startups in the world of fintech in recent years, and there is an obvious client base.

It is easy to understand the attraction of fintech in the online gambling community, particularly for those who are technologically savvy and tuned in to all of the latest developments.

The advantages of fintech are especially aligned to an industry such as iGaming - anonymity being near the top of the list. Players' information is kept private, which means there is no third-party ownership, while the transaction times are immediate - both of these often being of high priority to online gambling enthusiasts.

This disruption brought by the fintech industry means that it provides those who use the various platforms with a stress-free, more convenient experience - a crucial aspect of the entire iGaming process and user journey.

It appears that people are finding that the more traditional forms of banking at gambling websites are becoming more and more outdated, and as a result, fintech is swiftly starting to overtake them. There is an increasing unwillingness from players to enter their sensitive financial information into casino sites, while the newer fintech methods are also regarded to be 'cooler' and more 'in-vogue.'

There is another factor involved, though essentially a game-changer likely to link each component together for the benefit of the online gambling industry over the next few years - one that has already started to shape the outlook.

Gradual Growth of Cryptocurrency

The development of fintech and its seamless integration with the online gambling industry perfectly laid the foundations for what was about to come next and which is being predicted to have a highly supplemental influence in iGaming in the future - this is definitely the case when considering the current potency.

Fintech has essentially paved the way for a revolutionary new concept, though nevertheless functionally scalable, transformative, and versatile. The mere thought of digital currency, even 20 years ago, seemed out of the question, impractical even. Simply, technology had not developed or scaled enough to enable the creation of such and the functionality appeared impossible.

However, on the heels of the global financial crisis in 2009, came the birth of the world's first digital currency, courtesy of one of the brightest cryptographic minds, Satoshi Nakamoto, whose true identity still remains a secret.

Bitcoin has since grown legs - a lot of doubt cast about its ability or potential to make an impact at the time. Bitcoin has since laid the foundations for the creation of other digital currencies, the collective term being adopted and labeled as 'cryptocurrencies'.

However, one thing that Nakamoto, as all true luminaries did, which ensured that Bitcoin would be a success, was to develop a technology called blockchain which essentially allowed all cryptocurrencies to operate and function.

The system has proven to be perfect - a seemingly flawless infrastructure that records information so that it becomes impossible to manipulate or even hack. A digital ledger, that records transactions that are then duplicated and distributed across an entire network of computer systems that are on the blockchain.

Every block in the chain contains a number of transactions, however, the really clever part of the concept revolves around the decentralized database, called Distributed Ledger Technology (DLT), which means that it is free from federal scrutiny.

Since we have seen a number of new cryptocurrencies gradually emerge, though perhaps the biggest rival to Bitcoin - Ethereum, created by Vitalik Buterin, has just as much potency. The creation of Blockchain technology which essentially helps to further underpin the fintech industry, could well have set the wheels in motion for online gambling to really realize its potential in key markets over the next few years.

Cryptocurrency and iGaming - A Potential Tour de Force?

In April 2021, a group of cryptocurrency investors organized a poker tournament at the BTC (Bitcoin) Conference in Miami in what would become the largest buy-in event of all time, with only the investment firm Triton and the World Series of Poker matching the $1 million entry fee.

At such a time, there were already a number of online casinos that accepted cryptocurrency as a form of payment. While crypto-only casinos had also started to appear; however, even now, these are still very much in their infancy.

One thing we have learned though, is that it took at least a decade for the full potential of the internet to be realized; the same thing happened with telecommunications relating to mobile technology, fintech, and even cryptocurrency, with the latter taking at least eight years for it to really mature.

It could be argued that online gambling didn't become a truly global industry until the development of the smartphone. All of these components have been gradually sliding into place like pieces in a puzzle, and now with how popular cryptocurrency is becoming in key markets, where online gambling is also witnessing a surge, this could merge two industries and create what would potentially be powerful results.

Prime Market Ready to Dominate

Scandinavia is one region that is understood to be one of the most robust 'crypto' markets in the world, while online gambling has long had a major effect on the economy. Firms such as NetEnt, Evolution Gaming, and major operator conglomerate, the Kindred Group, all of which have roots in Sweden that date back to the late nineties.

Gilfred Helmonsen, who is a Norwegian gambling expert, has indicated that online gambling is almost certainly one of the reasons for such a surge in the popularity of cryptocurrency in his country.

Norway has one of the highest GDPs (Gross Domestic Product) in the world, boasting a prestigious education system. This has enabled it to create an infrastructure capable of being able to significantly capitalize on some of the most forward-thinking and pioneering industries in the world. A considerable feat, in view of the country's population of just under 5.5 million.

Throughout 2021, specialist online gambling cryptocurrency tokens, which include FunFair (FUN), saw their prices increase by 156.6 percent, with this capping a highly successful year for these online gambling-designated cryptocurrencies. At the latest count, the price of the currency had surged past the 183 percent mark, providing some of the most convincing and compelling evidence yet, that there really could be a credible future relationship between cryptocurrency and online gambling.