- Gambling companies are leading the way in the initial coin offering market, according to Credit Suisse research.
- The report found gaming and gambling companies stand to benefit from the blockchain and cryptocurrency space.
Investing in an initial coin offering (ICO) is a bit of a gamble in and of itself, so it’s fitting that more gambling and gaming companies have raised money via the fundraising method than any other category.
ICOs took off in 2017 in tandem with the entire market for digital coins. It’s sort of like a crypto twist on the initial public offering process, but for younger companies. Celebrities have played their part in hyping up the space, with entertainers from Paris Hilton to Floyd Mayweather Jr. promoting the fund-raising method for some companies.
A wide-ranging report by Credit Suisse, the Switzerland-based bank found, found a “high number of gaming and gambling companies” have used the mechanism to raise money. Here’s the chart from the report:
“Momentum is such that ICO funding in the tech sector almost surpassed traditional angel and seed funding in 3Q17,” the report said. “This trend shows no sign of slowing, leading to concerns from industry experts and regulators of over-capitalisation.”
In total, more than $US4 billion has been raised via ICOs, according to estimates by Autonomous NEXT. Business Insider reported about the massive $US500 million ICO to build a floating cryptocurrency casino in Macau.
According to the Credit Suisse report, gambling companies such as casinos have a lot to gain from blockchain and cryptocurrencies. The anonymity of cryptocurrencies is one such benefit.
“Demand for anonymous gambling is evident in the relatively high usage of pre-paid cards – such as the paysafecard- on gambling websites and in consumer behaviour surveys,” the report said. “Gambling with cryptocurrencies – as opposed to fiat money – can currently be conducted without the need to provide identification documents, or in some cases, without the need to create an account.”
Still, regulators are ramping up efforts to clamp down on initial coin offerings. China and South Korea are among the countries that have flat out banned ICOs. The Securities and Exchange Commission’s recently launched Cyber Unit has halted a number of ICOs for not following securities laws.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.