Investing in Bitcoin Casinos

Why should you invest in a Bitcoin casino? Well, because gambling is an incredibly lucrative industry and Bitcoin gambling is a rapidly-growing trade. With over $1 million US dollars being wagered every single day across investor-friendly Bitcoin casinos, investors are making an average of $10,000 profit a day. That’s $70,000 a week, or $3,650,000 a year. The better question is why shouldn’t you invest, and yeah, there are sadly plenty of reasons not to.

Bitcoin profit

On this page I will try to explain everything you need to know about Bitcoin gambling — the good, the bad and the ugly — so that you can make a more informed and hopefully safer decision about investing.

If you’re looking for a quick buck and don’t have the patience to wait, you’re better off making a bet on a Bitcoin casino. If you want high returns over a longer period of time, read on.

Key terms

You should familiarize yourself with these terms before continuing.

Bankroll: The size of the casino’s bank. This is the number of Bitcoins available for gamblers to try to win. This can also refer to the player’s bankroll (the amount they have to gamble with).

House edge: The percentage advantage that the casino has over the player. This is generally 1-2% on popular casinos. It can be thought of as the cost of a bet — for example, a 10 BTC wager against a 1% house edge will cost the player 0.1 BTC; he should expect to be returned only 9.9 BTC. Anything above or below 9.9 BTC is just variance.

Variance: This is what makes gambling work. In probability theory, variance is a measure of how far a set of numbers is spread out. With zero variance, nobody would win; they would only lose a fraction of their wager to the edge. Negative variance for the house means there are more winners, and positive variance means there are more losers.

Bitcoin Games Rating

93

Bitcoin Games Features

  • No registration
  • Provably fair
  • Multiple casino games
  • Highly trusted
  • Bitcoin only

FortuneJack Rating

88

FortuneJack Features

  • Multiple cryptocurrencies accepted
  • Huge range of games
  • High quality slots software
  • Regularly updated promotions

Calculating your expected return

Take a look at TheBitcoinStrip’s leaderboard to see the profit figures of the current most profitable casinos, and then disregard them completely. Because they don’t mean anything.

Why? Because those numbers are no indication for the future. In gambling there is a ton of variance, meaning some fortunate casinos are able to achieve a much higher than expected profit while others fall short or even dive into the negative. Just because a casino has had great luck in the past, it doesn’t mean it will have good luck in the future.

The only thing that matters is the expected value, or EV for short. This is how much the casino is expected to make, forgetting about the unpredictable swings of variance. To be able to calculate EV, you must know two numbers: the amount of coins wagered against the casino, and the casino’s house edge. This is the magical formula to calculate what a casino’s profit should be at:

EV = coins wagered * house edge

For example, a site with 1,000 BTC wagered and a standard 1% house edge should be expected to stand at 10 BTC profit. In reality, the number will never be exactly what is expected, but it should come pretty close most of the time.

Now you need to look at the volume of Bitcoin casinos and find a site which is flourishing in bet volume. You want to invest in a casino with an enormous number of coins wagered every day. An important metric to use when looking for high-volume sites is called the bank turnover. Bank turnover translates to how often an amount equal to the house’s bankroll is wagered on the site. This is how often the investors’ edge should be realised.

As another example, say a Bitcoin casino with a 1% edge has a bankroll of 500 BTC. Over 12 months, the total amount of Bitcoins wagered grew from 1,000 BTC to 2,000 BTC: a 1k BTC increase. That means that on average, it took 6 months for the size of the bankroll to be wagered, and so the bank turnover is 6 months or 182 days. What this means is that investors will make an expected return of 1% on their investment every 6 months: an annualized return of 2%.

Another important thing to consider before investing is the size of the bankroll before your investment. The more people invested, the more diluted each investors’ share will be. When you invest into a casino, you become a portion of the bankroll. If you put 90 BTC into a casino with a tiny 10 BTC bankroll, you will earn 90% of player losses. If you invest 90 BTC into a casino with a 1,000 BTC bankroll, you will only earn 8% of the site’s total profits because your share is much smaller. Under-funded casinos with disproportionately large betting volume will often yield greater return than the big guys. These sites will have a very quick bank turnover.

Casino data

This table is updated automatically every few hours with data from the past 90 days. It contains all the key stats that you need to consider when investing. All altcoin values have been converted to BTC for your convenience. Virtual bankroll refers to the casino’s bankroll adjusted for investors’ Kelly criterion risk factors.

KingDice Rating

70

KingDice Features

  • No sign up required - completely anonymous
  • Ability to invest in the platform
  • Winnings up to 2BTC

CloudBet Rating

79
info

CloudBet is a Montenegro-based casino and sportsbook. The site has been providing players based around the world with a safe, reliable Bitcoin betting service since it was first established in 2013. Powered primarily by BetSoft software, CloudBet guarantees a smooth gambling experience, allowing customers to navigate the site and enjoy immediate Bitcoin transactions with no fees.

Bitcoin Games

CloudBet is, first and foremost, a Bitcoin sportsbook. This is made evident by the style and design of the interface which is very sports-heavy and filled with images of football, tennis and hockey stars- among others. CloudBet’s dedication to sports definitely pays off, as the site boasts a vast, diverse sportsbook covering just about every sports market that even the most discerning Bitcoin sports bettor could hope to find including American Football, ESports and MMA. The sportsbook also has a ‘Specials’ section where players can place predictive bets on events in the political and entertainment arenas. There are dozens of different betting options available on each game and event in the Bitcoin sportsbook of CloudBet, starting with between 20 and 30 on major US sports and reaching around 100 on the Premiership soccer league. Betting options can be as simple as winner/loser or as specific as the first player to score.

In the casino section of CloudBet, players can pick from a wide range of Bitcoin slots powered by some of the biggest names in the industry including BetSoft, Microgaming and Play’n Go. At the time of writing, CloudBet’s slots library is 293 titles strong, which means that every player will find the style and theme of game to suit them. This jam-packed catalogue includes innovative video slots with hundreds of ways to win, classic five reel fruit machines and progressive jackpots. Also in CloudBet’s casino are 55 different types of table games. These, of course, include all of the usual casino classics such as blackjack, poker, roulette and baccarat- all of which come with a variety of different versions. Table game players can also play with Bitcoins on slightly more obscure games like Keno. At any time of day, CloudBet customers can enjoy the action of the live casino section by watching roulette, blackjack and baccarat games unfold in real time.

Whether players choose to place bets in the sportsbook or casino games section of CloudBet, they can enjoy fast, fuss-free Bitcoin betting in an instant-play web browser or in the fully optimized mobile version of the platform.

Reputation

Every Bitcoin gambler should do their research and take note of a site’s reputation before signing up for an account. When searching online for reviews of CloudBet, one of the first results to come up is a scathing report from a customer claiming to have been scammed out of their welcome bonus by CloudBet. This in-depth complaint is impossible to ignore and it does seem as though the complainant had a seriously bad experience with the site. However, this appears to be a one-off and CloudBet generally receives positive reviews from the public and is highly-favored by the Bitcoin betting audience. There is no question that CloudBet takes the security of players and takes plenty of measures, including implementing 2-step authentication and keeping Bitcoins in cold storage, to guarantee player safety. All of this contributes to the predominantly positive feedback that CloudBet has received.

Promotions

There is only one promotion on the cards at CloudBet. This is a 100% welcome offer which matches new players’ first deposit up to 5BTC. This highly generous welcome deal is dished out in increments of 10Mbtc at a time. CloudBet makes the bold claim that they offer the biggest and best Bitcoin bonus in the online casino/sportsbook industry. It’s difficult to verify whether or not this is genuinely the case, but this is certainly up there with the most impressive welcome offers we’ve seen yet.

Conclusion

CloudBet is a highly recommended Bitcoin betting platform for both those who prefer placing wagers on sports events or casino/slot games. The high standard of CloudBet’s games and website operation make this an enjoyable place to play, but it’s that astounding welcome bonus which really makes CloudBet stand out from its competitors. Like most casinos, there are features which CloudBet could improve; the most obvious is the customer support service which would greatly benefit from the addition of a live chat option. On the whole however, this is a great Bitcoin gambling spot.

CloudBet Features

  • Highly polished casino and sportsbook
  • Trusted and long standing
  • Multiple games, very active

Be aware of the risks

Aaaand it's gone.

Investing in the gambling industry is generally considered a safe bet as long as the casino has their maths in order. However, investing in Bitcoin casinos inherits the same risk as any other Bitcoin business. Because of the anonymous nature of the currency, scams and thefts are unfortunately commonplace in Bitcoin casinos and dice games.

Bitcoin theft

If a casino operator doesn’t secure their website, it will only be a matter of time until somebody snatches its bankroll. Most Bitcoin casinos nowadays keep two kinds of wallet to prevent against theft:

Cold wallet: This is where the majority of Bitcoins are stored. The wallet is stored offline and is never supposed to touch the Internet, making it impossible for an outsider intruder to abduct.

Hot wallet: A percentage of the bankroll (usually between 5 to 10 per cent) is stored online within easy reach to the casino so that winners can be paid out quickly and automatically. Without a hot wallet, withdrawals would not be instant. Whenever the hot wallet reaches a certain balance, some coins are moved to the cold wallet for long-lasting storage.

Casinos can and should publish proof of funds by signing a message with the cold wallet address, however most don’t. Casinos that do are able to prove that they have access to the bankroll they claim. If someone was to take a chunk of one of these casino’s bankrolls, people would notice immediately and warn the community. With other sites, a theft could go unnoticed for months and casino operators could essential run fractional-reserves without anyone being the wiser.

In short: Stay away from any casino which does not claim to have a cold wallet. Hacks and thefts do happen.

Inside jobs

Bitcoin theft (MtGox so-called inside job)

All good Bitcoin casinos are provably fair, but that only means they are fair for the ordinary player. Provably fair mechanisms rely on the server seed being unknown to the player until after the bet is complete. After the bet is over, the server seed is revealed so that users can ensure the outcome was predetermined and legitimately random.

Server seeds are not unknown to the casino owner. It is entirely possible for the operator to know what the outcome will be before placing a bet. Casino owners could use this to cheat investors with fake winnings, and it would be impossible to spot. There is currently no sound solution to this vulnerability; you just have to trust that the owner is making profit enough from commissions and is not greedy enough to rob you.

Mars Casino Rating

71

Mars Casino Features

  • Sister company of 7Bit Casino
  • Highly professional casino
  • Great selection of HD slots

Betchain Rating

92

Betchain Features

  • Provably fair
  • Big list of casino games
  • Highly respected casino
  • Wide range of bonuses
  • Slots from top software providers
  • 11 languages supported

Runners

This is by far the greatest risk when it comes to investing in Bitcoin casinos. An owner could simply close down shop and do a runner with the bankroll. In October 2014, one of the largest Bitcoin dice games, Dice.Ninja, vanished and the owner disappeared with 2,000+ BTC of player and investor funds.

Improper bankroll management

Proper bankroll management is crucial for any gambling-related business. Without it, there is a high chance of the house going broke.

The goal of good bankroll management is to minimize risk while still allowing for high returns. In gambling, the term risk of ruin is very important for casino operators to understand. Risk of ruin is a concept in gambling and finance relating to the likelihood of losing the entire bankroll, or impacting the bankroll to the point that it cannot be recovered. For instance, if you were to bet all your money on a single coin toss, your risk of ruin is a whopping 50%. The trick for casino operators to stay profitable is to bring the risk of ruin down to virtually zero.

Generally, casinos like to keep their risk of ruin below 1%. In order to do this, the maximum a player can profit in a single bet (known as the maximum win) is often pegged to a fraction of the bankroll. A lot of casinos tie the maximum win to an ever-changing 1% of the bankroll size, which is considered to be very safe.

Calculating casino risk of ruin is a tedious task usually involving millions of simulations, so I won’t explain it here. But what you should understand is that the smaller the bet relative to the bankroll, the lower the risk of the house going bust. Risk of ruin is only an issue when a player is max-betting all the time; if players are betting well below the maximum, then the risk is practically nonexistent.

Be wary of poorly-funded casinos offering large maximum wins. This means that the casino is operating with a tremendous risk of going bankrupt.

The law

Most Bitcoin casinos operate in a very dark grey section of the law, in the least. Being a widely unregulated industry, many casinos are likely operating without an obligatory gambling license. At the moment, nobody really seems to mind, but the law could catch up with us eventually. Government raids and seizures aren’t outside of the realm of possibility.

Choosing your own risk

Kelly criterion investment in Bitcoin casinosSome modern Bitcoin casinos allow you to set your own risk level or Kelly criterion. The easiest way to understand this is to think of it as leveraging your investment. At 1x, you are risking the standard percentage of your investment upon a player making a maximum bet (usually 1%). At 2x, you are risking double the standard and thus your profit/loss will be double that of 1x.

If one investor invests 100 BTC at a Kelly factor of 1x, he will see the same profits as an investor with 10 BTC at 10x. Of course, the 10 BTC investor is much more likely to go bust well before the 100 BTC investor. A Kelly factor of 10x is considered extremely risky; you could be wiped out by a whale in just seconds.

Making the investment

Okay, so now you understand the risks and are ready to pick a casino which you trust to invest in. There’s not much difference between Bitcoin dice sites and standard casinos — they’re the same thing. You can start by looking at the list of casinos offering investment by checking the box labeled Invest option.

List of bitcoin casinos with investment options

Once you’ve found a casino you trust, investing is incredibly simple. Deposit Bitcoins into your player account and open the investment tab on the site. Invest your BTC, sit back and reel in the profits.

Making an investment with 100 BTC

7BitCasino Rating

81

7BitCasino Features

  • Highly credible casino
  • Several games to choose from

mBitCasino Rating

82

mBitCasino Features

  • No personal details required
  • Established since March 2014
  • Huge range of casino games
  • Sportsbook available
  • VIP program

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