Stake.com, the largest cryptocurrency online casino and sports betting platform, fell victim to a hack this week, resulting in losses of approximately $41 million. These transactions included $16 million worth of Ethereum, as well as stablecoins like USDT, USDC, and DAI. Additionally, approximately $25 million in MATIC and BNB tokens were withdrawn. While many blockchain security experts suspect the breach may have been due to a leak of private keys from the platform's hot wallet, there were no complex on-chain activities associated with the incident. However, Edward Craven, the co-founder of Stake, told DL News in an interview on Tuesday that this vulnerability did not result from hackers gaining control of their private keys.
Craven stated, "The private keys were not leaked, but the attacker was able to carry out several unauthorized transactions from our hot wallet. This attack was a 'sophisticated breach,' targeting a service that the company uses for authorized transactions on the Ethereum, Polygon, and BNB Chain blockchains."
Following the incident, Stake temporarily suspended deposit and withdrawal functions but reinstated them in less than six hours.
A deeper look into Stake.com, the largest crypto casino, reveals that while $41 million is a staggering figure, it may only be a drop in the bucket for the platform. According to reports by the FINANCIAL TIMES, Stake.com boasted an impressive $2.6 billion in revenue in 2022, with Bitcoin transactions associated with its platform accounting for 6% of all Bitcoin transactions.
Stake.com's Founding History and Background
Looking back at the history of Stake.com, it was founded by Ed Craven and Bijan Tehrani in 2017. The platform's launch aimed to provide players with a globally transparent, secure, and fair online gambling experience. However, the founders' experience in the gambling industry goes back even further. Before launching Stake.com, Craven and Tehrani created Primedice, an online Bitcoin casino that was launched in 2013. Primedice was one of the earliest Bitcoin casinos and quickly gained popularity and success among cryptocurrency enthusiasts.
In just six years since its inception, Stake.com has risen from being a relatively unknown platform to becoming the seventh-largest gambling group (based on disclosed revenue). In the following sections, we will analyze several key factors that have contributed to Stake.com's success.
Key Factors for Stake.com's Success
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Anonymity and Cryptocurrency Emphasis:
Stake.com places a significant emphasis on anonymity and cryptocurrency, which is a notable draw, especially for users residing in countries where online gambling is heavily regulated or illegal. Unlike many major gambling groups that do not accept cryptocurrencies, many of the 600,000 regular users and 6 million registered accounts on Stake.com are located in "gray" markets such as Brazil, Japan, and other Southeast Asian countries. In these countries, regulations do not define online gambling on foreign websites, and Stake.com operates in this gray area, bypassing many regulatory restrictions through the anonymity of cryptocurrencies.
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Variety of Games:
Stake.com offers a wide range of games, from sports betting (covering nearly all sporting events) to casino games like poker and slot machines. They even introduced several original games like Plinko to cater to a diverse user base, increasing their appeal.
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Proactive Marketing:
Stake.com has employed a proactive marketing strategy, leveraging social media, influencer marketing, and online advertising, which has played a crucial role in its rapid growth. The platform also benefits from partnerships with well-known entities, particularly collaborations with celebrities like rapper Drake and sports teams like Everton FC and the Alfa Romeo F1 racing team. These partnerships have expanded its reach and reputation.
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Targeted Market Positioning:
Stake.com has consistently been at the forefront of cryptocurrency gambling innovation. As an online casino focused on cryptocurrencies, it has successfully attracted a user base passionate about cryptocurrency, gaming, and sports competitions. These are users who are willing to take risks and can handle high levels of risk. Collaborations with globally renowned artists and sports teams not only enhance Stake.com's brand recognition but also increase its credibility in the entertainment and sports industries.
Author's Perspective:
The recent hack has shown us just how astonishingly profitable these gaming platforms can be, not only Stake.com but also another cryptocurrency gambling platform, Rollbit, has disclosed its incredible profit potential, with daily revenues exceeding one million dollars. Over the past two years, as the cryptocurrency market entered a bearish phase, more gamblers chose to enter these casinos in pursuit of excitement. Even the renowned CT Sisyphus mentioned that data indicates that around 30% of cryptocurrencies withdrawn from Robinhood in 2023 directly entered casino platforms like Stake, Rollbit, and Roobet.
From my perspective, casinos are indeed one of the most suitable applications in the cryptocurrency space. The unique properties of being censorship-resistant and anonymous make cryptocurrency a perfect match for gambling. Compared to many DeFi applications that claim to be part of a financial revolution but lack real users and the slow adoption of NFT metaverse concepts, gambling has a real demand, a large user base, and the ability to generate real profits. However, most of these cryptocurrency gambling platforms currently only use cryptocurrencies as a means of deposit and withdrawal. Most of their functionality and data are not on the blockchain, and they remain highly centralized, not fully realizing the potential of the cryptocurrency space.
I believe that gambling finance has the potential to become a narrative in the blockchain world with a market cap exceeding a billion dollars. I look forward to the day when products with features like decentralization, anonymity, and a dividend mechanism appear, allowing users to be not only gamblers but also shareholders in the house.