Metaverse Gambling: A New Era of Gambling

This article is co-authored with Rob Jacobs. In this article, Rob and I will first introduce you the most notable metaverse gamble ICE Poker, and then talk about how traditional sports betting and gambling industry giants are reacting to this new era of gambling. Finally we'll share our view on the future of metaverse gambling.

Gambling virtually is not something new, but it grew dramatically during the global pandemic. The metaverse is making virtual gambling more exciting because the metaverse offers a unique gambling experience as compared to casinos in the physical world or online gambling platforms (iGaming). Some metaverse gambles are in VR while others are not. But almost all of them use crypto for transactions, which enables a decentralized gambling environment with an increased level of transparency and security managed via smart contracts.

The most notable example of metaverse gambling is ICE Poker, launched by Decentraland Games (DG).

DG is a metaverse game operator within Decentraland, a virtual world built on the Ethereum blockchain. Decentraland is developed and owned by its users, who can create, experience, and monetize content and applications. In February 2020, DG released its first game, named Chateau Satoshi. Since then, DG has launched five more games. Within all the games DG launched, ICE Poker is the most popular one. The ICE Poker game was launched in October 2021 and is based on Texas hold’em, one of the most popular poker games. ICE Poker is planning to launch a mobile app (ICE Poker Flex mobile web app) in August 2022.

Daily Active Users (DAUs) fluctuated dramatically since ICE Poker's launch in Oct 2021. Average DAUs dropped ~55% peak-to-trough per Messari, a crypto market intelligence company (see the graph below). The peak DAU of ICE Poker in Q1 2022 were 11,976 in April. By the end of Q2 2022 DAU has declined to 5,435 due to a severe crypto market downturn. ICE Poker was still able to pocket $5.6 million in Q2 2022 even during such a crypto downturn.

Traditional sports betting and gambling industry giants are also eyeing opportunities in metaverse gambling. Entain and Disney are two examples.

In March 2022, Entain, one of the world's largest sports betting and gambling companies, announced that it will invest over $130 million to launch a global innovation lab called Ennovate to develop immersive gaming and sports experiences. The $130M+ investment will be used to fund start-ups and develop applications for NFTs, VR, AR. Verizon, BT and Theta Labs are early partners working with Ennovate to develop ground-breaking metaverse experiences for customers. Entain’s CEO Jette Nygaard-Andersen has stated “We want to lead the way with new, exciting products and experiences for customers and use our cutting-edge technology to pioneer innovations in sport, gaming and interactive entertainment for the metaverse.”

Disney has strongly signaled the interest in the metaverse too. Disney CEO Bob Chapek has called the metaverse a "third dimension of the canvas" for Disney creatives. Disney’s sports strategy isn’t merely limited to rights acquisition and game coverage. Chapek says “it extends to sports betting, gaming and the metaverse. Disney has said that betting presents a huge opportunity for growth and interactivity, particularly as legalization continues across the United States.

Looking ahead to the future...

We think metaverse gambling has a very promising future. It will transform the online gambling industry. It is still a very new market with not a lot of players. So companies should look into how to tap into the opportunities in metaverse gambling, especially for the incumbent sports betting and gambling giants. The ones who can't adapt or move too slow will be disrupted by newcomers in the industry like DG. We think a key hurdle for gambling in the metaverse will be jurisdictional laws. While the sentiment towards virtual gambling is evolving, it remains illegal in many locales around the world. We will continue to monitor the industry developments of metaverse gambling and see how it will play out in the future.