Blockchain technology is driving significant changes in iGaming, as in every other industry, and these include much more than just the ability to make payments in cryptocurrencies. The introduction of Non-Fungible Tokens as part of loyalty programs is among them. Loyalty programs, which we often see on sites such as ICE Casino, now offer more player engagement thanks to NFTs and provide casinos with a new way to retain customers in a competitive market.
Understanding NFTs in the Casino Context
Let’s start by briefly explaining what they are. You can think of them as “digital assets” that represent the ownership of a particular item. For example, if you are the owner of a car, this information is contained in the car’s licence: you can use this document to prove that you are the owner. Now let’s imagine that you scan this licence, turn it into a digital item, and upload it to the blockchain.
An information/document in the blockchain cannot be manipulated or changed. However, its ownership can change hands, you can send information/documents to someone else just like transferring money, and you can transfer ownership this way. Going back to the car licence example, if you transfer the NFT of the licence to another user, you also transfer the ownership of the car.
So, how can this technology be used in casinos, especially in loyalty programs? NFTs have almost no limits in terms of content and can take different forms. For example:
● Unique collectibles: Players can earn NFTs that represent an achievement (for example, winning 10 times in a row on a slot machine). For certain games, these achievement NFTs can be extremely valuable, especially for collectors.
● Access tokens: they can entitle their holders to participate in special events (exclusive tournaments, VIP game rooms, special bonuses).
● Gamified rewards: Earning NFTs for achievements (for example, reaching a specific loyalty level) enhances the gaming experience and adds an interactive layer to gameplay.
It is also important to note that NFTs are transferable and can be monetised. For example, an NFT for a rare achievement in a casino game that is no longer available can fetch a high price.
Benefits for Players & Casinos
The introduction of NFTs in online casinos offers several advantages for both operators and players. The most notable ones for players are the following:
● Ownership and Control: Classic loyalty programmes are based on CP (complimentary points), which are nothing more than virtual points. They have no existence outside the casino’s records and cannot be redeemed outside the casino site. Non-Fungible Tokens, on the other hand, belong to the player, not the casino, and are stored on the blockchain. They are fully controlled by the player and can be used in the real world.
● Exclusivity and Prestige: Owning some rare NFTs provides a sense of exclusivity and enhances the gaming experience. They also provide recognition within the player community.
● Resale Value: As mentioned above, players can monetise NFTs by selling them. With rare Non-Fungible Tokens, it may even be possible for them to earn more money than they earn in games.
The advantages for casino operators will be as follows:
● Enhanced Customer Retention: Casinos that offer unique and desirable NFTs will be more preferred by players and will increase their membership numbers faster.
● Innovative Marketing Opportunities: these tokens can be utilised in much more creative and innovative marketing campaigns, and these campaigns can be more effective with the new generation of players.
● New Revenue Streams: Casinos can generate new revenue streams by selling special NFTs to gain access to exclusive events and/or rooms.
This technology can be used in more than loyalty programs. For example, there are multiple studies showing gamification elements have a positive impact on players. Non-Fungible Tokens can be used as one of these elements: in the form of trophies, they could be added to the prizes of weekly tournaments, for example. This would add dynamic gameplay to a traditional experience and make the gamified approach much more effective.
Challenges and Considerations
The use of NFTs in iGaming is not a completely perfect scenario and will cause some problems. Market volatility is the most serious among them. It is the market, not the loyalty level or the casino, that determines how much an NFT is worth. Like cryptocurrencies, they can be highly volatile and require players to constantly monitor the real value of their rewards. An NFT that is worth a lot in the morning may be completely worthless in the evening.
Regulatory compliance is another issue. A large portion of licensing bodies dislikes the decentralised nature of blockchain technology. Since Non-Fungible Tokens will be stored on blockchains, it is impossible to audit them in any way. Most agencies will refuse to licence casinos that make them part of their services. The legal infrastructure is not ready for blockchain technology in iGaming, as in other industries.