Poker players are enhancing winnings by cashing out in bitcoin
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By Olga Kharif
As bitcoin continues to surge, successful online gamblers are turning into even bigger winners by requesting the cryptocurrency while cashing out from some poker websites.
Winning Poker Network, which operates sites including AmericasCardRoom.eu, has had to buy millions of dollars worth of bitcoin a day from so-called over-the-counter trading desks in recent weeks to meet demand of exiting players, according to Chief Executive Phil Nagy.
"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.
Bitcoin is in so much demand, brokers are charging up to a 1.5% premium, he said. The business does more than 60% of its transaction volume in bitcoin. That's about $100 million a month, Nagy said.
The cryptocurrency climbed as high as $18,479 on Wednesday, the most since December 2017. It has jumped about 60% in the past month, renewing memories of the almost 1,400% surge in 2017 that preceded a more than 70% decline the following year.
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.
Poker sites were among the first to adopt bitcoin, which has been in part credited for fueling their growth in recent years. A top-10 poker property in the world, WPN began accepting bitcoin in 2014, and last year set a Guinness World Record for the largest crypto jackpot in online poker, of $1 million.
The covid-19 pandemic has been credited with accelerating online gambling. The poker industry grew 43% since April, according to The Business Research Co. The shutdown of land-based casinos, plus strict lockdowns that left people with time on their hands have contributed to the industry's growth -- and its use of bitcoin.
Long-time customers can deposit dollars and make withdrawals in bitcoin, Nagy said. Before the recent rally, about 60% of customers cashed out in bitcoin, while now it's over 90%, he said.
WPN, for its part, doesn't hold on to bitcoin, but converts it into fiat as soon as possible -- as bitcoin is known for its wild price swings, Nagy said.
Sometimes, it doesn't have a choice, though. Nagy remembers the times when bitcoin's price crashes, as it often does.
"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."