An increasing number of young adults from the UK are undergoing gambling addiction therapy after becoming hooked on trading crypto, the UK’s National Health Service (NHS) has warned.

Speaking at the NHS ConfedExpo on Wednesday, NHS chief executive Amanda Pritchard stated that opportunities to become addicted to gambling are rising and that the methods used to keep people hooked are becoming “ever-more sophisticated.” 

The National Problem Gambling Clinic told Pritchard that gambling in ‘unregulated cryptocurrency markets’ in the UK is becoming increasingly addictive for young people. Indeed, much of the current memecoin hype in crypto can be compared to gambling, with traders betting that coins will either skyrocket or plummet over the course of a week or in as little as five minutes. 

Pritchard said, “As a society, we need to ask: are we OK to just continue picking up the pieces.”

She added, “The NHS opened the 15th specialist center for gambling addiction, responding to a real and growing social need. Again, the NHS can help — will help. But again, we can’t solve this alone.”

Gambling support increasingly helping crypto addiction

Research from the UK Gambling Commission last year found that 2.5% of the British population may be suffering from ‘problem gambling,’ where gambling becomes “damaging to a person or their family, often disrupting their daily life and career.” The 2.5% figure was eight times higher than previous findings.

The commission also found that problem gamblers are much more likely to own crypto and invest via mobile trading apps, such as eToro and Robinhood, than non-problem gamblers. One UK Gambling support line reported an increase in the number of people seeking help with problems arising from high-risk day trading, including crypto.

Read more: UK shuts down ‘trust me bro’ crypto firm that promoted $1.7B Ponzi

In May 2023, the UK’s Treasury Select Committee published a report claiming crypto should be regulated like gambling. It said unbacked crypto assets have “no intrinsic value and no useful social purpose,” and that regulating crypto as a financial service would “create a ‘halo’ effect, leading consumers to believe this activity is safe and protected when it is not.”

Two months later, the UK government rejected the report’s recommendations and claimed that a system of gambling regulation would not be able to address the risk factors associated with events like the collapse of FTX. 

It added, “The recommendation to rely on gambling regulation would represent a fundamental departure from the Government’s intended approach which reflects recommendations from global standard-setting bodies.”

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Crypto gambling project ZKasino has announced a ‘two-step bridge back process’ for users to finally withdraw their share of what was branded, at the time, as a $33 million rug pull.

However, users have only been given a 72-hour window (that’s until 2pm UTC on May 31) in which to ‘sign up’ to withdraw their funds, which are now worth over $40 million in total.

Read more: ZKasino $30M ‘favor’ to users — seamless transition or rug pull?

The original incident was sparked by an April 20 announcement that ETH deposits made as part of a bridge-to-earn rewards program would be converted into the project’s own ZKAS token, as a “favor” to users.

Despite previous assurances that the deposits would be available to withdraw 1:1, the 10,515 ETH had instead been transferred into a multisig address controlled by the team. Nine days later, the funds were sent to three wallets in the form of Lido’s wrapped staked Ether token (wstETH).

The decision to enable users to withdraw their funds comes almost a month after Dutch authorities announced the arrest of “a 26-year-old man who is suspected of fraud, embezzlement, and money laundering” in connection with ZKasino, as well as seizing over €11.4 million ($12.4 million) worth of “various assets.”

The involvement of law enforcement seemingly had an effect on the team, as the funds were returned to the project’s multisig on May 9.

The same day, ZKasino’s pseudonymous Derivatives Monke took to X (formerly Twitter) to “strongly reject” the claims of a rug pull as “completely false and damaging to the ZKasino brand.”

The post points out that the “ETH is safe and secured by ZKasino in the ZKasino Multisig,” but makes no mention of why it had been removed in the meantime.

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Following a month-long ‘bridge-to-earn’ program, crypto gambling platform ZKasino launched its own network on Saturday. However, the announcement included a nasty surprise.

In what ZKasino referred to as a ‘seamless transition,’ users were informed that “All bridged Ethereum has been converted to our native gas token, ZKAS… as a favor to our users.”

Not only was the 10,505 ETH, (worth $33 million at the time of writing) converted to the project’s own token without forewarning, but the tokens themselves would not be available to users right away. “Keep in mind that the majority of ZKAS is vested over 15 months, only 5% is distributed out immediately.”

The ‘bridged’ ETH was sent to a multisig address controlled by the team. The sum was then deposited into Lido a few minutes later where it earns over $1 million per year, given the current staking yield of 3.2%.

The move has been branded by much of the crypto community as a ‘rug pull,’ especially given the multiple previous assurances that the funds would be accessible for withdrawal once the new network went live.

The site’s bridge webpage (now offline) previously stated that once the chain was live, funds would be ‘returned and can be bridged back.’ Deleted tweets and audio clips confirm the same.

Communication breakdown

On Friday evening, a user asked why the website’s promise to return ETH had been removed in the ZKasino Telegram group. The chat went ‘on lock’ shortly afterwards, with the simple explanation of ‘No moderator available.’

The following morning, the use of Chinese in the chat was banned — purportedly because people were hiring hitmen — before the moderator gave up completely: “No point even unlocking the chat,” they wrote.

ZachXBT raised concerns over the ZKasino team late last year, labeling them ‘proven bad actors.’

Read more: Crypto security firms more concerned with social media clout than the details

Others pointed out that the project has nothing to do with the various buzzwords that it uses to market itself, such as ‘zk’ (zero-knowledge) technology and ‘EigenDA’ (for data availability). The underlying ‘ZKasino chain’ is instead an ‘an Arbitrum Nitro chain that took two minutes to deploy.’

The project’s ‘pre-audit’ was conducted by ChatGPT ahead of a full audit by Certik.

In the wake of the backlash, VC firms have distanced themselves from the team, who avoided engaging directly with criticism, preferring to post a standard marketing tweet that only tangentially refers to ‘noise and FUD.’

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Major crypto gambling site Stake has been sued by a Sydney-based share trading platform using the same name, as it attempts to enter Australia’s gambling market.

A federal court lawsuit was filed by the trading site, HelloStake.com, last week. Court documents seen by the Australian Associated Press argue that it had already established a strong brand and reputation in Australia and therefore the crypto casino shouldn’t be allowed to operate in the country under the Stake name.

HelloStake.com allows locals to “seamlessly invest” in US stocks. It made the case that the crypto casino broke the law by using its name and making false and misleading statements on its website, which confused Australia-based customers into thinking the companies were related. Features of Stake’s crypto casino, including its e-shop, are already available to locals as it attempts to secure a casino license.

Read more: BitBoy and another less famous Ben are giving crypto a bad name

Stake.com is based in Curaçao but operated from Australia. The crypto casino has found widespread success in part through securing partnerships with big names like Canadian singer Drake and infamous crypto shill Ben Armstrong, known as BitBoy.

In 2021, the Sydney Morning Herald discovered Stake.com was founded by Melbourne-based billionaire Ed Craven and American business partner Bijan Tehrani. In June, the duo narrowly dodged a $400 million lawsuit by their former partner Christopher Freeman, who claimed he had been misled and ousted from the firm. The US case was dismissed due to lack of jurisdiction, but Freeman may find better luck suing the pair in Australia.

Stake can profit from Australia’s growing appetite for gambling

The global online wagering industry’s market size was valued at nearly $64 billion in 2022. It’s projected to grow at a compound annual growth rate (CAGR) of almost 12% from 2023 to 2030, according to Grand View Research. Online casinos have expanded as higher mobile phone use and 5G tech have increased customer size in recent years — but blockchain has also played a significant role in the industry’s growth.

With higher transparency, faster transactions, and fewer regulations, crypto gambling has become a convenient option. For Stake.com, the growing Australian market is attractive. The amount of Australians that had gambled in the past six months rose from 7% in 2018 to 11% in 2021, representing 2.8 million people.

However, the risks associated with widespread gambling have caused streaming platform Twitch to ban certain gambling content. Last year, it blocked Stake and three other platforms in response to a streamer scamming his own viewers out of $200,000 to support his gambling addiction.

Two weeks ago, Twitch added two more platforms to its ban list and said that gambling viewership was down 75% since it introduced the ban. Despite this, “new trends” had emerged. Twitch said it was updating its policy to better protect users.

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Popular streamer and serial NFT project founder DNP3 has admitted to using investor funds to fuel his gambling addiction.

The social media star has over one million followers and subscribers across Twitter, Twitch, Instagram, and YouTube and is particularly well-known for highly-publicized acts of generosity, including handing out huge sums of money to other streamers.

DNP3 also had a hand in founding a number of NFT projects, including CluCoin, the Gridcraft play-to-earn platform, and the Goobers NFT project.

In a statement issued on January 3, the streamer revealed that over the past year, he’s become addicted to gambling and has pumped “every dollar he could find” into the Stake crypto casino. Life savings now gone, DNP3 described himself as “completely broke both financially and spiritually.”

“Over the last year, I got incredibly addicted to gambling. Every dollar I could find I would put into Stake in hopes of winning big. Even when the big wins did happen it wasn’t enough. Eventually, I lost everything… I also irresponsibly used investor funds to try and get my money back from the casino which was wrong for so many reasons.”

Read more: Crypto gambling livestreams to be banned from Twitch after $200K scam

The disgraced social media star then went on to apologize profusely, saying that “there aren’t words to describe the level of shame and guilt” and calling his confession “my attempt to break free.”

He wrapped up by saying that he’s working with a help group to aid his recovery.

According to Web3 is Going Just Great, the extent of the damage done to the projects involved and those who have invested in them is still unknown. However, DNP3 does say that he’ll create a separate tweet that will include the next steps relating to each of the projects he was involved with.

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A recovering gambling addict lost $300,000 to an online casino after the site showed him how he could use crypto to bypass banking restrictions and licensing laws. 

Australian Blake Barnard was winning his fight against his gambling habit after his bank stepped in and canceled his casino deposits.

However, as detailed in an interview with ABC, once online betting platform Luckystar noticed the canceled deposits it emailed Barnard, recommending that he try using his Visa or crypto.

The casino pointed out that Barnard’s bank couldn’t stop him from depositing into the casino if he converted his money into crypto first. He subsequently exchanged $150,000 of his own money and $150,000 of his mother’s.

While it isn’t illegal to gamble in Australia, it is illegal to provide online gambling activities such as those found in a casino. Because of this, many casinos offer their services through offshore companies outside of Australian jurisdiction.

Read more: Crypto gambling livestreams to be banned from Twitch after $200K scam

Indeed, Luckystar is registered in Curaçao a country described by gambling experts as a place for cheap and speedy casino licenses. ABC spoke to journalists who claim it has “no regulation, no law enforcement, and no taxation at all.”

The site also supports the depositing of bitcoin and reportedly employs a quick sign-up process without the need for users to enter their address or country.

Barnard is now planning to take legal action against two online casinos operating in Curaçao, claiming that they failed to recognize or help prevent his gambling addiction. Luckystar didn’t respond to any of ABC’s questions.

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Hot on the heels of a Twitch streamer confessing to scamming fans out of more than $200,000, the platform has announced it will ban all crypto gambling livestreams from October 18.

The Amazon-owned site said on Wednesday that after monitoring the situation for some time, certain gambling firms will be forbidden as they “aren’t licensed either in the US or other jurisdictions that provide sufficient consumer protection.” 

“We’ll be making a policy update on October 18th to prohibit streaming of gambling sites that include slots, roulette, or dice games,” the statement posted on Twitter read. Twitch specifically mentions gambling sites Stake.com, Rollbit, Duelbits, and Roobet but says it may identify more in the coming weeks.

“We will continue to allow websites that focus on sports betting, fantasy sports, and poker,” Twitch stated.

Read more: Crypto trading hamster outperforms Bitcoin, Warren Buffett, Cathie Wood

Twitch crypto gambling has caused massive losses

As reported by Bloomberg, Twitch’s recent rise in gambling livestreams has led to addiction for some and alarming debt for others.

Gambling outfits like Curacao-based Stake.com sponsor popular streamers — and celebrities, like rapper Drake — several millions of dollars a month to crypto gamble in front of fans on Twitch.

Stake’s intense marketing strategy seems to have paid off. Viewers were getting hooked, deciding to get into the action themselves. But unlike the streamers they were watching, their losses weren’t being absorbed by ludicrous sponsorship deals.

“Once the initial excitement of seeing someone play with such huge sums wore off, it was mostly off-putting and made me sick watching it,” one gambler told Bloomberg. “It also gave viewers a false sense of winning and losing.”

$200K scam leads to Twitch streamer protests

Last weekend, a Twitch streamer called Abraham “Sliker” Mohammed confessed to scamming friends and fans out of over $200,000 to pay off his gambling debts. Mohammed would borrow money and lie about where it was going to pay for an addiction that began by trading Counter-Strike skins.

Many popular streamers responded to the scandal by threatening to leave Twitch if the platform didn’t ban or regulate gambling. A few days later, Twitch announced on Twitter it would prohibit the activity.

Read more: Here’s how insiders are getting rich off the Ethereum Merge

Crypto gambling is currently illegal in the US but the rules are less strict in Canada. While spokespeople for Stake told Bloomberg it takes stringent measures to prevent VPNs from being used to circumvent country restrictions, reports indicate they may not be effective.

Stake also said it “uses a number of measures to address at risk gambling behaviour,” even giving out free software that blocks gambling.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City. 

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