Bitcoin Sportsbooks – A Risk too Far?

bitcoin gamblingIn gambling there are many variables to consider, and when gambling with different currencies, one has to consider how the exchange rate might affect winnings. Recently Bitcoin has entered the gambling arena, and with the value of the currency being extremely volatile, it is extremely difficult to know exactly at what odds you’ll be betting, which makes finding true value trickier as you’re effectively gambling on both the betting markets and the exchange rate. As a word of caution, here is a story about one of the first Bitcoin Sportsbooks:

Months after its launch, bitcoin only Sportsbook Coinbet has closed its doors. Upon launch, Coinbet had been the subject of much coverage and praise in the press, being the first Sportsbook since Black Friday to offer real money online gambling in the United States, and the site was trusted by many thousands of users. However, over the Easter Weekend visitors were met with a notice indicating that the site was now closed and a contact e-mail address for users to “negotiate payment arrangements to collect account balances and/or refund of deposits.” It is estimated that as much as five million dollars is owed to users of the site.

One user of the site, Michael Katz, is claiming that Coinbet has left him out of pocket in the region of $340,000, and just a day after he went public with his accusations, Coinbet closed down. Coinbet claimed that Katz had failed to meet his bonus requirements, despite him zeroing out his account on 25 occasions and being told “would only need to clear your CURRENT bonus, to meet rollover requirements.” Apparently, on the home page of the site, the balance would only appear in dollars, with a secondary page showing dollars and cents – and Coinbet claimed that he had never actually zeroed his account, as he still had some funds in his account (less than a dollar).

When Katz considered going public with his concerns, he was frustrated by the sites terms and conditions which in part stated “Any information publicized without the express written consent of will result in immediate termination of the account in question and forfeiture of any winnings or account balances.”

On April the 18th Katz did indeed go public with his concerns, having decided he would be unable to receive the funds he felt he was owed, and wrote the story of his time with Coinbet on the Bitcointalk forum. Within twenty four hours Coinbet had closed down.