Sports betting in cryptocurrency has been rising and falling with the price of Bitcoin this year, with bets on the NBA, soccer and tennis spiking in the first quarter as the blockchain-based money more than doubled against the dollar, according to sportsbook Cloudbet.
Cloudbet, primarily an Internet sportsbook with a license in Montenegro, says this year’s price rally in cryptocurrencies has led to a surge in sports betting, with total betting value in December and January up 75% compared to a year earlier (the company didn’t provide dollar amounts). The sportsbook, which has been in operation since 2013, says the rise mirrored how betting activity perked up during Bitcoin’s 2017 rally to a then-record price of $19,000 per piece. Bitcoin opened 2021 at $29,000 a piece and rallied to $59,000 at the start of April. Sports betting volume tracked the prices as HODLers felt wealthier, according to a company spokesperson.
Predictably, then, the decline in Bitcoin price from its peak of $63,000 in mid-April to $37,000 at the end of May led to betting volumes dropping, although Cloudbet says crypto bet volumes are still 3.5-times higher than last year and is seeing strong action on the NBA Playoffs.
Some of the volatility in cryptocurrency is attributed to Tesla billionaire Elon Musk, who has whipsawed the market by stating at various times this year that Tesla would and wouldn’t accept Bitcoin. The so-called Elon Effect is seen most clearly in Dogecoin, a cryptocurrency originally created as a satire of crypto mania. Musk has referred to Dogecoin repeatedly on Twitter in the past year. When he tweeted a simple missive saying “The Dogefather” at the end of April, many thought it augured bullishness on the billionaire’s part.
As a result, Cloudbet says Dogecoin holders are now among its most active customers, accounting for almost a tenth of players each week (half of the sportsbook’s bets remain in Bitcoin). The operator launched a Dogecoin casino at the start of May. “We ran a customer survey a couple months ago, and the most requested coin was Dogecoin,” said Camilla Wright, spokesperson for Cloudbet.
As invented money without the benefit of traditional economics like interest rates and trade flows to gauge value against other currencies, cryptocurrencies are often driven by speculative behavior and the emotional whims of traders. Of late, Dogecoin has been falling—after Musk didn’t hype the coin on SNL, China cracked down on cryptocurrency, and traders supposedly sold it when the Dogecoin-sponsored NASCAR vehicle crashed in Nashville last Saturday.
The speculative nature of cryptocurrency, on the other hand, may also be what powers its use in sports betting.
“There’s a lot of overlap between crypto traders and sports bettors, so it’s not terribly surprising that you see more betting when crypto traders have larger balances to play with,” Eilers & Krejcik gambling analyst Chris Grove wrote in an email. “While there may be a positive correlation, it’s not necessarily going to look the same for every sportsbook, and there are probably a dozen or so other factors that exert more influence over betting volumes in the short run.”
And while Cloudbet offers bets in a dozen cryptocurrencies, to large sportsbooks, crypto remains a curiosity, largely forbidden from use by regulators, although Wyoming approved crypto gambling in April. There is no reliable data on how much sports gambling takes place in crypto worldwide.
“We have to wait and see how crypto goes and how it evolves,” said Super Group CEO Neal Menashe in an interview on his firm’s going public merger earlier this month. “Crypto’s just another currency. It’s all about, ‘Will the bankers allow you to use it?’”