💼 Restrictions don’t kill the market – they just create another opportunity to make money

💼 Restrictions don’t kill the market – they just create another opportunity to make money

In just one week, our beloved casinos got two telling signals:

– In Curaçao, the regulator’s document leak is likely to:

1) push licensees toward new offshore jurisdictions (the guys in the Comoros are probably frantically upgrading their IT security right now 🫡),
2) make nominee services more popular,
3) and encourage more brands to operate without any formalities at all (especially as P2P keeps spreading across the world 🌍)

– Brazil went even further: yesterday, the authorities banned betting. Before that, 85 companies had paid around $5 million each for licenses and jumped through countless hoops to comply with the constantly changing requirements of a left-wing, protectionist government. Their word, their rules: they gave permission, then took it back.

We can debate politics and regulation. But for our market, there is a more interesting question.

💲 If demand remains, where does it go?

The modern internet has made black markets technologically cheap and economically attractive – and black markets existed long before the internet anyway 🏴‍☠

Nominee services, P2P, shell companies, crypto, and distributed infrastructure make it possible to separate the product from the payment, the payment from the legal entity, and the legal entity from the ultimate beneficiary.

None of this makes the activity legal. But make it economically attractive.

And this creates the effect that repeatedly leaves politicians and activists shooting themselves in a very familiar place:

the more legal infrastructure is squeezed while demand remains, the more profitable the illegal infrastructure becomes.

We can already see different versions of this model in well-known markets – where PSPs still willing and able to operate can find mountains of money:

🇮🇳 India has also banned online money games, their promotion, and payment servicing. Mahadev Online Book, one of the country’s largest illegal betting networks, may have generated around $5 billion in total proceeds for its participants, according to various estimates.

🇰🇷 South Korea heavily restricts online gambling, blocks websites, and prosecutes participants. Yet in just seven months, police identified 1,746 illegal online gambling cases and detained more than 2,300 people. Just one offshore operation uncovered by the authorities had turnover of KRW 1.31 trillion.

🇦🇺 Australia blocks offshore operators – yet with a population of around 28 million, the illegal betting market is estimated at more than U$2 billion per year.

🇷🇺 Russia is gradually tightening control over crypto flows and restricting access to regulated infrastructure. At the same time, judging by the processing rates and offers we see in the market, pricing is near peak levels. Those who remain are taking an increasingly large share thanks to specialization.

The mechanics are broadly the same:

1. Pressure from politicians and/or activists
2. Administrative restrictions
3. Shortage of available processing or exchange rails
4. Higher profitability as compensation for risk

Money always looks for new routes.

The main beneficiary of restrictions may ultimately be not the person the government or activists are trying to protect, but who knows how to operate where an ordinary bank, acquirer, or PSP no longer can.

Most likely, 2% Pix processing will soon become a thing of the past – and there may finally be attractive enough rates for Eastern European teams to get much more seriously involved 🤎

Very often, the high margins of the black market are simply the price of regulation itself.
🌟 PGON – spend crypto in Russia without KYC. QR payments and card withdrawals from a legal entity.