Firm says online gambling accounts for almost half of all Bitcoin transactions

Although it's not quite legal in the US, online gambling is big business in BTC.

by Megan Geuss - Aug 24 2013, http://arstechnica.com/business/2013/08/firm-says-online-gambling-accounts-for-almost-half-of-all-bitcoin-transactions/

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Even though I'm "not allowed" to visit this site, lots of people are gambling with Bitcoin online.

It's no secret that online gambling has been lucrative for a few pioneering companies. Even though it's been illegal in the US since 2006, companies have made relatively large sums serving customers who are either placing bets outside the US, through a VPN, or by simply sending a Bitcoin amount to a fixed address corresponding to a “game” which will return a player's money with various probabilities.
One of the biggest Bitcoin gambling sites, SatoshiDice, stays on the up-and-up with US regulators by blocking IP addresses coming to its site from the US, but in January 2013 it reported ฿33,310 in profits in 2012, which at the time reflected $596,231 (although today it would reflect much more). SatoshiDice also reported that it made an average actual profit of ฿135.96 per day (about $2,416 in 2012 rates) from May through December 2012.
Although SatoshiDice was sold to an unknown buyer in July, it is still probably one of the largest online Bitcoin gambling sites out there. And according to a blog post written by Jeremy Liew, a partner at a venture capital firm called Lightspeed Venture partners, transactions from SatoshiDice accounted for somewhere between 25 percent and over 50 percent of all Bitcoin transactions in the month of June 2013.
SatoshiDice reported its last public financial statement in June 2013, as it was still being traded on the Bitcoin-denominated stock-exchange MPEX before being sold to a private investor. In that June statement, it reported 372,712 bets placed over 30 days, which averages out to about 12,424 bets per day. As Liew notes, winning bets involve two transactions: the placing of the bet and the return of the winnings. Losing bets obviously only involve one transaction: the placing of the bet.
If every bet on SatoshiDice was a winning bet, then there would be approximately 24,800 transactions in June on SatoshiDice. According to Blockchain, there were about 48,400 transactions per day in June. This would put SatoshiDice at serving up 51 percent of all Bitcoin transactions in June.
Of course, not every bet is a winning bet, and so the number of transactions on SatoshiDice in June was higher than 12.4 thousand, but lower than 24.8 thousand. In an e-mail to Ars, Liew noted that the company hosts a couple dozen games with different win probabilities that gamblers can play, several of which have win probabilities of 50 percent or higher.
“Satoshi Dice accounts for somewhere between 25-50 percent of all network traffic by transaction volume, depending on the distribution of bets, but we think that the distribution of bets is towards the higher probably of winning, so more like 50 percent than 25 percent, “ wrote Liew.
Still, SatoshiDice transactions tend to be smaller. If you look at average daily transaction volume for June, SatoshiDice only constitutes 5 percent of daily Bitcoin transaction volume. But these numbers are just based on one company: the recently-launched Just-Dice is growing in the online gambling community, and bitzino, which offers online poker, blackjack, craps, and roulette, said at the beginning of this year that 3.2 million wagers were made in the second half of 2012.