WEEKLY EDITION
April 1, 2021
NFTs Create An Art History First
On March 11, 2021, a Charleston, South Carolina, graphic designer named Mike Winkelmann (who goes by the moniker, Beeple) sold the first purely digital artwork titled “Everydays: The First 5000 Days” for USD 69,346,250, purchased in Ether, a cryptocurrency, at a Christie’s auction.
The buyer, Vignesh Sundaresan (who goes by the moniker, MetaKovan), told CNBC that he knew the auction would be competitive and prepared to pay even more for what some describe as a JPG file accessed by a hyperlink. Sundaresan believed the transaction would be an art history first.
What is an NFT?
Clarifying nothing, an NFT is a “Non-Fungible Token.” This means that the NFT is a unique digital item, like an audio file, video, or illustration defined as a Token on a Blockchain medium.
So, when you buy an NFT, you’re not purchasing the digital asset. You’re buying a unique token that theoretically represents ownership of the digital asset. You see, unlike artworks in the physical world, US courts will not recognize the “First Sale Doctrine” when it comes to digital assets because they can be perfectly duplicated with ease.
NFT and the NBA
One of the most prolific users of NFTs is the National Basketball Association, through their Top Shot service, created by the Canadian company, Dapper Labs. The NBA licenses the right to digital video clips for personal use by the NFT buyer. As of February 2021, the NBA had made over USD 230M in gross sales. Earlier this year, Dapper Labs raised USD 250M, valuing the company at USD 2B, primarily because of Top Shot.
NFTs Store Digital Art, Right?
No. Many people think that the digital asset is stored within the blockchain token itself, but that’s not usually true. Most digital assets are just too large to be stored as data on a blockchain, so instead, they often hold a digital reference to external storage, such as a location within the Interplanetary File System (IPFS). The IPFS is viewed as theoretically more resilient as the file can be accessed on the IPFS as long as one node on the IPFS network is hosting the file and connected.
This is still not a perfect solution, despite these assets selling for tens of millions of dollars. A team running “Check My NFT” has been checking NFTs to see if their IPFS addresses resolve the digital assets and found many NFT associated assets from famous artists such as Steve Aoki and Deadmau5, missing. It’s a fact that a hardware failure in the right circumstance could cause a permanent loss of assets.
NFTs in the Casino Gaming Industry
On March 7, Frederic Chesnais, CEO of Entertainment software company Atari SA announced the April launch of an online casino in partnership with Decentralized Games, using the Ethereum Blockchain, including “Atari-themed games and Atari non-fungible tokens (NFTs).” A joint statement from the organizations stated that “The companies expect to see bets of $150 million in 2021 and $400 million over two years.”
Other companies pitch the use of NFTs as winnings for casino gaming, where the NFT represents an asset value. It’s like, playing a pachinko game and winning a green plastic dinosaur which you walk down the street to another location to trade for twenty bucks in cash. Sounds legit.
What to make of NFTs
It’s best to view NFTs as highly speculative collectibles, dependent on third-party systems to exist. The NFT associated with HOMERPEPE, a digital image mashup of Homer Simpson and the internet meme Pepe the Frog, made a first sale of USD 38K in the cryptocurrency, PepeCoin. On March 5, 2021, the owner sold HOMERPEPE for USD 320K. Of course, neither the NFT for HOMERPEPE nor the PepeCoin has any intrinsic value beyond what people are willing to give up to have them. Still, common sense never stood in the way of creating a new multi-billion dollar industry, right?
Related Client Partners
Liked the article? Check out our Client Partners below.
- Betfred Sports is a turnkey provider for brick and mortar, online and mobile sports wagering and iGaming.
- Sporting Solutions provides modular sports betting solutions for pricing, risk management, analytics and tooling for sports book operators who want to outsource parts of their business.
- Metric Gaming‘s multi-tenant cloud-based sportsbook platform.
- Picklebet is a full featured online esports betting platform.
- Betswap technology enables sports books to provide a secondary marketplace for their customers to sell or buy bets no longer available at the sportsbook.
- Netacea provides bot detection and mitigation for web, mobile and APIs
- LSports provides real-time sports data solutions to provide valuable performance insight.
- Triggy provides B2B solutions for live score messaging and personalization.
- Oddin provides the largest and most available source of esports data.
- Golden Race uses realistic odds data to provide virtual sports outcomes that reflect real player and team performance.
Read More about all our Client Partners
WELCOME TO YOUR ROUNDUP OF EUROPEAN IGAMING NEWS
Our European weekly iGaming feature article summarizes the thoughts of Jake Pollard, an experienced journalist and editor who has covered the online gaming and betting industry for many years. He has written for the leading media outlets as well as operators and suppliers in the igaming space. His areas of focus are wide-ranging and include regulatory developments in the US, emerging markets in South America and how European countries are adapting to a decade of igaming regulation.
Bet365 Founder Earned £421m in the Past Year
It might be April Fool’s day today, but no one in the iGaming industry would describe bet365 CEO and founder Denise Coates as one. The UK bookmaker’s annual report, revenues dropped 8% to £2.8bn in the past 12 months, revealed that Coates had been paid £421m over the past 12 months, excluding a £95m dividend that bet365 executives will share. According to the London Times, her eye-watering remuneration is thought to approach the total of all FTSE 100 bosses salary last year, adding that “the mean chief executive pay across almost all the FTSE 100 was £4.7 million.” Critics have commented that such salary levels are “obscene” and a “sad indictment of the UK” as a country. Her defenders point to the £573m in taxes bet365 pays to UK Treasury, the 4000+ staff it employs on mainland UK, that Coates and her family built up bet365 to the company it is today on their own and that she takes her salary as PAYE, rather than a much more tax-efficient dividend. The notoriously media-shy Coates doesn’t comment or give interviews, which is probably a good idea when passions run so high.
Spain Dishes out the Pain
Spain’s iGaming industry is bracing itself for the advertising ban and bonus reforms coming into force this Summer, and the country’s regulated operators are deeply unhappy about it. This is understandable as advertising should be one of the benefits of being regulated and paying taxes in a leading market like Spain. The country will also feel the impact of an expected drop in the number of signups as brands cannot promote their products. The hit to sports teams’ finances will also be considerable. Still, there is also a significant worry that illegal operators will redouble their efforts to target Spanish players and severely impact the numbers playing on regulated sites.
Germany Treaty to Get Sign Off?
Will Germany sign off on the Interstate Treaty on Gambling, and will it come into force from 1 July? State leaders have approved the treaty, but it still needs to be ratified by at least 13 of Germany’s 16 state parliaments by the end of this month to become law within the agreed schedule (so far, only nine states have ratified it). Online casinos will not be allowed under the new treaty, which will enable unlicensed operators to target the market.
SCCG Management: New and Upcoming Events
STEPHEN CRYSTAL TRAVELING TO NEW YORK, IOWA, NEBRASKA, TEXAS AND CALIFORNIA
Stephen Crystal in the process of planning and scheduling travel to New York, Iowa, Nebraska, Texas and California, where he will be meeting with clients and partners in April.
If you are interested in reaching out to Stephen Crystal regarding these trips, please contact him directly at stephen.crystal@sccgmanagement.com.
Gaming Americas Meetups
Stephen Crystal will be participating in a panel discussion for the GA2QM Virtual Conference on April 29, 2021. Be on the lookout for more information on this conference as it is released.
Stephen Crystal, SCCG Founder, announces the formation of the iGaming Law Group.
For more information on this firm, please visit their website at igaminglaw.online or contact Stephen Crystal by email at stephen.crystal@sccgmanagement.com
