Digital Poker Sites Say ‘95%’ Of Players Demand Payouts In Bitcoin To ‘Enhance’ Winnings

As bitcoin powers back toward all-time highs unseen since late 2017, traders around the world are wondering: who exactly is driving this rally? Many probably assumed that the retail Robinhood traders who invaded the stock market this year have also found their way to trading crypto, and that’s probably a fair assessment.

But to sustain this type of a move, larger institutional players are necessary to ensure that demand never slackens, or else the volatility for which the pioneering cryptocurrency is infamous could come roaring back. Well, a reporter with Bloomberg who apparently set out to identify some of the big players in the market has made an interesting discovery: For years now, digital poker websites have been a constantly growing source of demand for the cryptocurrency, since customers often prefer to cash out in bitcoin, instead of USD, or some other currency.

While the percentage of customers dealing in crypto was roughly 60% last year, that percentage has grown to 90%+, forcing poker companies to work out pricey OTC deals with brokers. Phil Nagy, the CEO of Winning Poker Network, a Costa Rica-based operation that runs some of the world’s most successful poker websites, told Bloomberg his company is buying millions of dollars’ worth of crypto per day.

“Right now 90-95% of our payouts are people asking for Bitcoin because it’s going up,” Nagy said from Costa Rica. “We are constantly having to go out and buy Bitcoin – lots. Lots. More than we’ve even had to before.”

The lion’s share of the site’s customers are Americans, even though online poker is illegal in most states.

The exchanges are making a killing, charging large buyers like WPN a 1.5% premium on its trades. In turn, WPN does roughly 60% of its transaction volume involving its customers via crypto. Roughly $100 million in crypto passes through its accounts every month. Demand from professional and hobbyist gamblers has apparently replaced demand from online drug dealers, another sign of the digital currency’s maturation. It was this demand that helped push bitcoin to its highest levels since late 2017 this week.

Even if the price of bitcoin retreats, or say the bubble bursts entirely, online poker players have another incentive to continue using crypto: they can help Americans avoid paying taxes on their winnings, much of which would be considered illegal since virtual poker is illegal in the US.

Digital-asset enthusiasts may also be hoping to avoid taxes by using the sites, said Aaron Brown, a crypto investor and a writer for Bloomberg Opinion. At Costa Rica-based Winning Poker Network, players file their own winnings and losses, “we don’t regulate that,” Nagy said. About 60% of the business’s customers are from the U.S., he said. And there’s a perception that Bitcoin may be harder for U.S. authorities to track than other funds.

While this trend may have peaked recently as a crowd of compulsive gamblers realized they could parlay their winnings by betting on bitcoin, it’s not exactly a new development. According to one of Bloomberg’s sources, digital poker sites played an important role in adopting bitcoin (just like dark web drug markets) back in 2013-2014, when virtual currencies were establishing themselves as more than a mere fad.

But as customers growing increasingly comfortable with bitcoin as a means of payment, they’re figuring out how to exploit many of the poker platforms’ policies for their own benefit. While Winning Poker Network tries to convert all bitcoin into fiat as quickly as possible, Nagy said, sometimes it gets “stuck” when bitcoin prices drop sharply. “When Bitcoin drops or does something significant, inevitably, we have people send us $100,000 or $200,000 in Bitcoin, because it’s the fastest way to liquidate it,” Nagy said. “And we are kind of stuck with it.”

With all the alt-coins starting to pop off, online gambling platforms could become major buyers of ethereum and other popular crypto as well.

Looking further back into the past, this shifting preference for BTC over dollars is reminiscent of another currency-related trend that began roughly 15 years ago, when the euro was in a major bull market against the dollar. The greenback was softening, and fears of taking on that FX risk prompted supermodels like Gisele Bundchen to demand that they be paid in euros.

Now, what does this demand to be paid out in bitcoin suggest about the long-term prospects for the greenback, and the rest of the fiat universe?

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