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. Investing even a small amount in a Bitcoin casino can make you a quick buck or even provide you with a long term investment. The better question is why shouldn’t you invest, and yeah, there are sadly plenty of reasons not to.
On here 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.
First, 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.
House edge: The percentage advantage that the casino has over the player. This is generally 1-2% on popular casinos.
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.
Max profit: How much a player can win in a single bet. This gets paid from the casino's bankroll and casino's with a high max profit usually attract big whales, therefore increasing the casino's chance of losing a large amount of it's bankroll at once.
Calculating your expected return
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, doesn’t mean it will have good luck in the future.
The only thing that matters is the expected value. This is how much the casino is expected to make, forgetting about the unpredictable swings of variance. The most important numbers to know for calculating the EV are: 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:
EV = coins wagered * house edge
For example, a site with 1,000 BTC wagered and a standard 1.5% house edge should be expected to stand at 15 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.
Another important thing to consider before investing is the size of the bankroll before your investment. The more people that have invested into the bankroll, the smaller 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 the profit. 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 now. Under-funded casinos with disproportionately large betting volume will often yield greater return than the big guys.
Now let's talk about the risks of Bitcoin casino's...
Obviously, the first risk that comes to mind is theft. A percentage of the bankroll is stored online within easy reach to the casino so that winners can be paid out quickly. If a casino operator doesn’t secure their website, it will only be a matter of time before somebody tries to snatch its bankroll. Considering the amount of hacks and thefts in the crypto world, this is very important to keep in mind when investing your coins in websites.
Another possible risk is an inside job orchestrated by the owners of the site.
All good Bitcoin casinos are provably fair, but that only means they are fair for the ordinary player. Provably fair systems rely on the server seed being unknown to the player until after the bet is complete. After the bet, the server seed is visible so that users can assure the outcome was predetermined and completely random.
However, server seeds are not anonymous 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 decent solution to this vulnerability. It could also be possible that the owners run off with the bankroll. It is important to do proper research into a casino to confirm its reliability and longevity.