iGaming Business magazine iGB 112 Sept/Oct 2018 | Page 83

Feature
BLOCKCHAIN
With regulators set to clamp down on the
ICO gravy train, Hannah Gannagé-Stewart
looks at other ways that gaming businesses
are assimilating blockchain technology
There’s no doubt that initial coin offerings (ICO) split opinion.
While many igaming businesses have used them to raise much-
needed start-up funds, critics in the industry regard them as little
more than a pyramid scheme.
Despite the bad rep, ICOs have come to characterise the crypto
and blockchain phenomenon over the past few years. But they’re not
the whole story and as lessons are learnt and the regulators move in,
some businesses looking to experiment with blockchain are taking a
different tack.
KamaGames is one such business. The social casino started
researching crypto and blockchain back in 2011 but only went live
with its token sale in August.
Chief executive Andrey Kuznetsov says while an ICO wasn’t
always off the table, in the end it presented too much of a risk for
too little reward. “ICOs are associated with some legal challenges.
Beyond the legal risk, this can be a huge PR risk for an existing
company that values its name and products and has a reputation,”
he explains.
Instead, KamaGames opted to run a token sale. For a limited time
its customers, and latterly the general public, are able to buy tokens,
which they can then exchange for chips to play at KamaGames online.
“A completely trustless ecosystem
removes any middlemen within
whom trust has to be placed
to make a transaction”
2.0
The campaign not only tests the appetite of Kama’s customers for
crypto, but also encourages acquisition of new players and retention
of existing ones with a number of incentives.
Holding onto the tokens brings rewards, in the form of bonus chips
for the duration that you hold the token and a growth in the exchange
rate. The casino guarantees an increase of 25% each month during
the first 36 months.
The idea is that punters hold onto their tokens and cash their chips
out gradually, thus avoiding inflation in the customer economy. The
introduction of a variety of player vs environment (P2E) games has also
been planned to assist in this aim, with slots the key to bringing chips
out of the customer economy and back into the house.
Kuznetsov’s cautious approach to crypto is designed as a learning
curve. Depending on the results of the token sale, he says the business
may consider a security token offering (STO) in future.
STOs bear more resemblance to a traditional IPO; regulated in the
US by the Securities and Exchange Commission (SEC), they treat the
purchase of tokens as a secured investment, similar to shares.
“We’ve been thinking about private placement for a number of
years,” Kuznetsov explains. “We still haven’t decided but we have been
looking at STOs, so this campaign is testing the water.”
Unlike KamaGames, crypto casino FunFair opted to take the
plunge with an ICO relatively early on. In June 2017, it raised $10m in
ethereum, as well as more than $10m in other currencies and private
institutional investment in the space of just four hours.
FunFair founder Jez San knew he was taking a risk but was
undeterred by the prospect of being a crypto pioneer. FunFair aims to
corner the crypto casino market, appealing to punters not only on the
basis that they can use crypto to gamble but that a blockchain-based
platform offers superior security and fairness to players.
i GamingBusiness | Issue 112 | September/October 2018
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