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The rest is politics

Forbes this week reported on a somewhat unusual investment in the world of gambling, as “controversial billionaire political donor Peter Thiel”, alongside Ethereum founder Vitalik Buterin, raised around $70m for a crypto startup called Polymarket.

Polymarket is one of a few major cryptocurrency-led startups offering “event contracts” allowing users to bet between themselves on things like political elections – even though it is technically prohibited in the US.

There is also “the threat of impending federal regulation for election gambling,” according to the article.

Still, Polymarket is not restricted to politics betting, but rather allows users to bet on the outcome of almost any real-world event they could imagine – “everything from the number of times Elon Musk tweets in a week to whether or not Taylor Swift will get engaged in 2024.”

Apparently, gamblers have already staked more than $125m on the 2024 presidential election on Polymarket, where Donald Trump is listed as a slim favourite over Joe Biden.

With betting volume like that on a single event, perhaps it’s no wonder that Peter Thiel – whose venture capital fund Founders Fund also invested in SpaceX and Facebook – is thought to be the lead investor in Polymarket’s latest funding round.

Polymarket is not the only start-up offering this kind of contract between users, with others such as PredictIt and Kalshi offering a similar service.

The latter of those is a New York-based company that was the first to receive approval from federal regulators to operate a contract market in 2020, according to Forbes.

Polymarket, for its part, does not appear to be regulated in the US and “essentially operates as an offshore betting platform,” the article suggests.

Forbes also points out that election betting is illegal under US federal law, but that “many companies have been lobbying the Commodity Futures Trading Commission in recent years to ease the restrictions.”

If more regulatory pushback is still to come, as the piece goes onto suggest, the value of Thiel’s investment may well be brought into question quite soon.

As for whether apps like Polymarket are set to disappear for good – you wouldn’t bet on it.

Can I have my crypto back?

Bloomberg this week brought us another cryptocurrency-related story, as it shared the inside scoop on what’s coming next in the much-publicised FTX scandal.

After the business collapsed and founder Sam Bankman-Fried was sentenced to 25 years in prison on charges including wire fraud, money laundering and securities fraud, former account holders with the crypto exchange are now set to receive a payout.

The story doesn’t end there, however, as while there’s never a good time to be defrauded and have your savings disappear thanks to someone else’s negligence, the timing of the scandal was particularly bad for crypto enthusiasts.

Former FTX account holders are set to be repaid the full value of what was in their accounts in late 2022 when the platform began to implode, plus a little interest on top.

However, those funds will not be repaid in cryptocurrency (“because there simply wasn’t enough to go around”) but rather in US dollars.

The problem with this for many is that the value of the original crypto assets has more or less quadrupled since that time, and those who insist they would have held onto their Bitcoin – rather than cash it in – are calling foul on the decision to repay funds in fiat.

According to experts quoted in the article, the case has been dealt with “in line with bankruptcy law and how similar cases have been handled,” and in fact many have claimed it’s a boon for former FTX users to receive 100% of the value of funds in their accounts at the time of the company’s collapse.

In other bankruptcy cases, creditors can be repaid for just pennies on the dollar, the piece suggests.

So, while a full repayment of funds seems to be good news for former users of the exchange, it seems every silver lining has a cloud.

Readers are encouraged to view this article in full to get the detailed run-down of events.

What a card

The Financial Times also brought us its view on upcoming changes to the UK’s land-based gambling sector that was confirmed this week.

While restrictions on online operators are set to increase significantly under the UK government’s review of the 2005 Gambling Act, there is some cause for celebration among land-based operators, as the changes also aim to “level the playing field” between the online and offline sectors.

One major change, for example, would see arcades and other land-based gambling venues able to accept payments by debit card on their gaming machines, where previously only cash was allowed.

A previous 2021 survey by the Gambling Commission said that cash was seen as “the best way to maintain control over gambling spend.”

However, the introduction of card payments on gaming machines aims to bring the land-based sector up to date with the reality of the modern world, as “some sectors, particularly machines in pubs, are seeing business disappear because customers do not carry cash,” according to Gambling Minister Stuart Andrew.

Other measures aimed at improving the lot of land-based operators include “enabling casinos to offer more machines and allowing arcades and bingo halls to have a higher number of bigger-stake gaming machines.”

The moves have been welcomed by many in the industry, with Rank Group CEO John O’Reilly saying:  “We are looking forward to improving the customer proposition in our venues.”

Shares in the publicly-listed casino and bingo operator rose 6% in the wake of the government announcement.

Elsewhere, industry consultant Adam Rivers described cashless payments in casinos as a “real positive step” catering to changing consumer demand.

The director of campaign group Clean Up Gambling, Matt Zarb-Cousin, however, said the change would present “significant risks” to individuals.

With new best practices including ID verification, check-ins with staff and deposit limits also expected to come into play, hopefully the British land-based industry will do everything it can to implement the changes in the safest way possible.

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