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Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heart podcast,

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Speaker 1: and I'm Stacy Marie Ishmel, Managing editor of Crypto for

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Speaker 1: Bloomberg News. It's Thursday, September. You might not have heard

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Speaker 1: of Twitch, but it's one of the most popular places

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Speaker 1: on the Internet, and it's owned by a company you've

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Speaker 1: definitely heard of Amazon. Millions of people every day use

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Speaker 1: Twitch to watch their favorite live streamers. And what did

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Speaker 1: those live streamers do? Everything from playing video games to

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Speaker 1: applying makeup to solving math problems in real time. Video

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Speaker 1: games are still the biggest category of live streams and

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Speaker 1: people tune into on Twitch, and the biggest games like

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Speaker 1: Grand Theft, Auto Five, Fortnits, and League of Legends absolutely

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Speaker 1: dominate time spent on the platform. But there's a new

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Speaker 1: addition to that top ten, and it's crypto gambling. Crypto

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Speaker 1: gambling is the seventh most popular content category on Twitch

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Speaker 1: right now. Many streamers are being paid very handsomely by

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Speaker 1: the companies involved to take part in this activity. But

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Speaker 1: why and where is this all coming from? And what

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Speaker 1: are the risks of encouraging a whole new generation of

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Speaker 1: people to gamble? Joining me now is Bloomberg Video Game

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Speaker 1: reporta Cecilia Denastasio, one streamer who is actually the most

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Speaker 1: popular streamer on twitched lost a hundred and sixty four

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Speaker 1: thousand dollars in literally a hundred thirty nine seconds, to

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Speaker 1: talk about the tool of this growing trend. Cecilia, welcome

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Speaker 1: back to the podcast. Thank you for having me. Let's

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Speaker 1: start with the big question, which is people have probably

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Speaker 1: heard of TikTok, They've probably they've definitely heard of YouTube.

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Speaker 1: At this point, they know what Netflix is, they know

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Speaker 1: what Hulu is. Where does Twitch fits into that video ecosystem.

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Speaker 1: Twitch is a platform for live streaming video games and

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Speaker 1: other forms of content, ranging from putting makeup onto performing music,

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Speaker 1: or doing art. It's kind of become the default live

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Speaker 1: streaming service on the Internet, but it was started to

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Speaker 1: live stream people playing video games. And the live streaming

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Speaker 1: elements is you know, there's like very little post production.

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Speaker 1: You like, stick a camera in your face. It might

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Speaker 1: be a fancy camera in your face, might be well

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Speaker 1: made up, but the idea is that people are getting

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Speaker 1: like an in the moment of the moment, real time experience. Yeah, totally.

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Speaker 1: It's emergent, it's spontaneous, and also notably the chat. Um

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Speaker 1: They're called the chat, but actually it's users typing in

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Speaker 1: a chat will communicate live with the Twitch streamer, who

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Speaker 1: is encouraged to interact with them. It creates these sort

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Speaker 1: of paras social relationships that um really have uh launched

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Speaker 1: a lot of people's careers into kind of Internet stardom.

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Speaker 1: He's one of the most popular stars on Twitch, with

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Speaker 1: more than a million followers. Meat Iron Mouse Iron Mouse

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Speaker 1: broke records, recently becoming the most subscribed to woman on

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Speaker 1: Twitch and the most popular vituber on Twitch. Vitubing has

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Speaker 1: become a sensation over the last couple of years, with

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Speaker 1: an over four hundred and sixty seven increase between two

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Speaker 1: thousand twenty and two thousand twenty one. A while ago,

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Speaker 1: there was a leak of some Twitch financials, and one

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Speaker 1: of the things that came out of the it's is

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Speaker 1: that some of their top streamers um from video games

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Speaker 1: and tabletop games, are making tens of millions of dollars

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Speaker 1: a year on this platform. Absolutely, Twitch streamers make a

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Speaker 1: lot of money. Um if you're in that top like

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Speaker 1: point five to one percent. A lot of people who

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Speaker 1: live stream on Twitch are just kind of average people

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Speaker 1: who want to play a little Minecraft hang out like one, two,

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Speaker 1: three or four viewers. And then there are these behemoth

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Speaker 1: channels that have you know, seventy thousand, a hundred thousand

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Speaker 1: people watching them stream live. And in addition to streamers

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Speaker 1: making money UM based on subscriptions that those viewers pay

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Speaker 1: for their content, which is like five dollars a month

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Speaker 1: or something like that. UM viewers can also donate money

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Speaker 1: UM to Twitch streamers through twitch itself using this currency

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Speaker 1: called bits. So it's like they're in house almost like

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Speaker 1: a cryptocurrency, one could say. Now on that topic, because

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Speaker 1: we are on a show about about crypto. In your

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Speaker 1: recent story, you wrote about the fact that you know,

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Speaker 1: you've got these beheam of games that you mentioned, the Fortnits,

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Speaker 1: the League of Legends, the Grand Theft Auto five and

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Speaker 1: kind of creeping into that top ten of you know,

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Speaker 1: time spent in terms of viewers is crypto gambling? Yeah,

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Speaker 1: it feels totally random in some ways, right, because you're

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Speaker 1: just like, why why are the same people who like

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Speaker 1: watching competitive League of Legends also watching someone just click

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Speaker 1: their mouths like eight hundred thousand times and playing online slots.

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Speaker 1: But it's interesting because there's a bit of a heritage

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Speaker 1: with gambling on Twitch that actually didn't come from Crypto.

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Speaker 1: It came from something a little obscure called counter Strike skins.

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Speaker 1: So there's this video game called counter Strike. It's the

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Speaker 1: first person shooter by this company, Valve, extremely popular, and

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Speaker 1: one thing people love to do in that game is

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Speaker 1: dress up their guns with what are called skins. They're

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Speaker 1: basically just like costumes and your guns or your guns, right,

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Speaker 1: And UM, what people found out is that, you know,

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Speaker 1: there's a really lucrative marketplace for these People were selling

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Speaker 1: them for hundreds even thousands of dollars. People love to

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Speaker 1: show off their cool rare like a K forty seven,

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Speaker 1: like army, you know style. I just want to know

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Speaker 1: that this is a wild series of sentences, but please

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Speaker 1: carry that's gaming for you. Basically though, Um, there are

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Speaker 1: these websites that cropped up several years ago for skin gambling,

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Speaker 1: so people would play roulette to earn these skins, um,

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Speaker 1: and it was something that was very lucrative. There were

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Speaker 1: very very large and um well off companies that were

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Speaker 1: doing this and um importantly, a lot of people who

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Speaker 1: were under eighteen also participated in this and which is

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Speaker 1: a problem by legal standards. It is a problem by

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Speaker 1: legal standards, allegedly. Um, I'm not a lawyer. There were

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Speaker 1: a lot of lawsuits around this. When did when did

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Speaker 1: cryptogambling on Twitch become popular? Because obviously the council strike

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Speaker 1: legacy is long well established, you know, been around for

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Speaker 1: a while. Has seemed to me to have fallen out

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Speaker 1: of favor as much in the past couple of years.

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Speaker 1: But then you know, over the course of the pandemic,

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Speaker 1: you had this up surge in crypto gambling. What does

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Speaker 1: that look like, What are the mechanics exactly, and is

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Speaker 1: it the same kind of population that's playing totally. There

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Speaker 1: were some skin gambling sites that even did transition to

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Speaker 1: crypto gambling sites, so they definitely know their audience. Crypto

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Speaker 1: gambling is a pretty interesting phenomenon. It's not um legalized

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Speaker 1: anywhere in the US. It's kind of an opt in situation,

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Speaker 1: so there's no blanket loss and you can't gamble with

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Speaker 1: crypto in the U S. It's kind of a state

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Speaker 1: by state thing, and no states have deemed it legal yet.

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Speaker 1: Despite that, there are these offshore companies um like Steak,

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Speaker 1: which is incorporated in curasou um that offer you know, roulette,

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Speaker 1: they offer slots, they offer blackjack um where you instead

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Speaker 1: of playing with real money, you play online with crypto

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Speaker 1: And it kind of continues this lineage of counterstrike skin

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Speaker 1: gambling just because it's this kind of there's this idea like, oh,

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Speaker 1: it's not real money. Oh it's so accessible. Oh I

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Speaker 1: can do this even if I'm eighteen, even if it's

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Speaker 1: technically illegal. It feels a little like, I don't know

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Speaker 1: totally and like a little like gritty and cool to

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Speaker 1: some people. What are the sums even if it's not,

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Speaker 1: as you see quotes unquote real money, but like, what

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Speaker 1: kind of sums are we talking and what are the

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Speaker 1: types of tokens that people are using to engage in

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Speaker 1: crypto gambling? Yeah, just your typical ethereum, your typical bitcoin um.

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Speaker 1: The sum of the people are gambling are huge though.

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Speaker 1: So the rapper Drake Um is a partner with steak

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Speaker 1: dot com and when he was gambling there um a

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Speaker 1: couple of months ago, he he started with this nine

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Speaker 1: million dollar balance I forget which coin he was using,

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Speaker 1: and every single bet he made on roulette was between

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Speaker 1: three hundred thousand and a million dollars. You mentioned, you know, roulette,

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Speaker 1: you mentioned blackjack, like things that are sound fairly typical.

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Speaker 1: So it's not that the crypto gambling is that people

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Speaker 1: are like gambling in the metaverse in this particular instance,

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Speaker 1: or that they're playing like crypto games. Is that they're

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Speaker 1: playing very traditional gambling games, but the steaks are denominated

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Speaker 1: in different cryptocurrencies exactly. There is a however, gambling in

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Speaker 1: the metaverse too. Yes, well, it depends on who you

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Speaker 1: are and whether you think there is a metaverse, but

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Speaker 1: there are some companies that have branded their virtual worlds

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Speaker 1: as metaverses and um. The Central Land in particular is

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Speaker 1: one where a lot of the user base is there

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Speaker 1: to gamble with cryptocurrency. Like at any given point, most

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Speaker 1: of the people in the Central Land are there to

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Speaker 1: play what's called ice poker. What is it frosty maybe

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Speaker 1: for your wallet the chill of crypto winter. Ice poker

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Speaker 1: exists in this legally gray area in that there are

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Speaker 1: a lot of steps and hoops to jump through that

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Speaker 1: they've set up. It's like there are so many um

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Speaker 1: steps you have to take between real money going in

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Speaker 1: in real money going out with ice poker into centraland

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Speaker 1: that some lawyers have said it is legal, and other

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Speaker 1: lawyers have said, I don't really understand this, but it

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Speaker 1: could be gray. We'll be right back with more from

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Speaker 1: Cecilia Donastagio on the companies behind these games. You know,

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Speaker 1: the Internet is everywhere, and that is kind of a

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Speaker 1: challenging proposition. So how how are folks planning to decide? Well,

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Speaker 1: it looks like this person is signed up in a

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Speaker 1: state that doesn't allow online gambling, and if you know,

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Speaker 1: crypto gambling ever becomes regulated, what are we're just gonna

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Speaker 1: like block people in New York or you know whatever

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Speaker 1: that might be. Like, what are some of the mechanics

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Speaker 1: that play here? Yeah, it's interesting because crypto gambling isn't

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Speaker 1: really on um congress Is radar. It's barely on the

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Speaker 1: American Gaming Association's radar because the most important thing right

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Speaker 1: now they're trying to tackle with illegal gaming is illegal

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Speaker 1: sports betting. That's huge. Crypto gambling is also quite big. Um.

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Speaker 1: I'm not able to compare them because again, we just

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Speaker 1: don't have statistics on this kind of thing, but um,

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Speaker 1: it's really flying under the radar for a lot of legislators.

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Speaker 1: You know, you only mentioned the US context. Stake also

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Speaker 1: has a UK entity that is, you know, registered on

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Speaker 1: the Isle of Man in terms of the laws internationally.

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Speaker 1: Is this like another area of complexity that these global

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Speaker 1: platforms have to contend with, Like how are they just

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Speaker 1: handling the idea that in addition to state by state regulations,

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Speaker 1: they may also having to be making decisions on countries.

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Speaker 1: I don't know what kind of decisions Stake itself is

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Speaker 1: making because frankly, it is not challenging to access from

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Speaker 1: the US. Other online gaming sites UM have a very

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Speaker 1: rigorous process for ut able to gamble on them. You

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Speaker 1: might have to upload your I d They might have

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Speaker 1: something that prevents you from using a VPN to get

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Speaker 1: on the site. They might you know, UM ask for

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Speaker 1: information from your bank. And Steak dot com UM, while

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Speaker 1: it does have a VPN blocker, it doesn't seem to

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Speaker 1: be taking quite so many pains to comply with a

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Speaker 1: lot of local laws. With that said, twitch streamers who

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Speaker 1: are taking sponsorships from Steak dot com have left the

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Speaker 1: US and moved to Canada, so they like move physically

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Speaker 1: like there's not even that their channel is redemiciles like

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Speaker 1: they the streamer have switched countries. Correct, that's intense. Is

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Speaker 1: it worth their while economically to be doing this? Oh

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Speaker 1: my god, yeah. I mean I talked to a streamer

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Speaker 1: who was offered nineteen million dollars a year to gamble

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Speaker 1: on steak dot com. But that's not even the highest

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Speaker 1: bid out there. There are people who are making several

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Speaker 1: million dollars a month um just because of these sponsorships.

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Speaker 1: But on the other side of the coin, it's kind

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Speaker 1: of dark because ha ha, a couple of these top

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Speaker 1: people are legitimately, it seems, addicted to gambling. One you know,

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Speaker 1: one streamer who is actually the most popular streamer un twitched,

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Speaker 1: lost a hundred and sixty four thousand dollars in literally

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Speaker 1: a hundred thirty nine seconds. There's another streamer who lost

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Speaker 1: twelve point nine million dollars in just one month. I'm

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Speaker 1: glad you mentioned the issue of gambling addiction. Like, we've

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Speaker 1: done an episode on this show about crypto addiction, and

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Speaker 1: you know, one of the things that we talked about

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Speaker 1: is the fact that so many of the mechanics built

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Speaker 1: into these apps, built into these platforms, really encourage certain

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Speaker 1: types of very addictive behavior. It strikes me as extremely

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Speaker 1: similar to you know something the two of us talked about,

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Speaker 1: like lootboxes in mobile gaming and the ways in which

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Speaker 1: these games are just like designed to extract money from you.

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Speaker 1: Is there any pushback at all either from consumers, from groups,

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Speaker 1: from you know, concerned parents about the fact that these

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Speaker 1: kinds of mechanics are now finding themselves and yet another

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Speaker 1: expression that is gaining in popularity. I don't know if

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Speaker 1: it's even quite so detached. This is just literally gambling.

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Speaker 1: If you go to state dot com, you can click

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Speaker 1: a button and you are in a black jack room

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Speaker 1: and there was a live human blackjack dealer who you

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Speaker 1: are literally playing blackjack with. It's just for crypto, right

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Speaker 1: and um. Despite that, despite how literally gambling it is, UM,

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Speaker 1: there isn't a lot of pushback um on these sites

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Speaker 1: outside of the Twitch community where it's become popularized on

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Speaker 1: twitch top Twitch streamers who are very concerned about their

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Speaker 1: friends becoming addicted to this and also viewers becoming addicted

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Speaker 1: have made a out of statements along these lines saying

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Speaker 1: that Twitch should ban this content or it should prevent

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Speaker 1: streamers from taking these deals. Somehow, there was a very

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Speaker 1: popular petition as well, signed by just like two thousand people,

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Speaker 1: which isn't a ton of people, but it's not insubstantial um.

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Speaker 1: Asking advertisers on Twitch like Nvidia and Pepsi to reconsider

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Speaker 1: those deals in light of the popularity of crypto gambling.

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Speaker 1: You know, I've I've spoken to several people for this

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Speaker 1: story that I wrote who did become to crypto gambling

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Speaker 1: after watching Twitch streamers do it, and of course they

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Speaker 1: were they themselves chose to go to State dot com

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Speaker 1: or any of these websites and lose money in that way.

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Speaker 1: All of them of course lost a lot of money. Um.

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Speaker 1: But at the same time, you know, there is some

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Speaker 1: relationship there between watching the streamers do it and doing

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Speaker 1: it yourself. Goes back to the idea of the power

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Speaker 1: social relationship that you mentioned, where you can like you're

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Speaker 1: projecting your feelings of intimacy, engagement connection onto these folks,

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Speaker 1: which which is one of the reasons that makes endorsements

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Speaker 1: from them so powerful. Exactly, Well, heavy but important stuff.

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Speaker 1: Thank you for joining us today, Thank you for having me.

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Speaker 1: Thank you, Cecilia. You can find more of Cecilia's reporting

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Speaker 1: on the Bloomberg Terminal on Bloomberg dot com or follow

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Speaker 1: her on Twitter. She's at cc anasta. That's c E

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Speaker 1: C I A N A s t E. On the

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Speaker 1: next episode of Bloomberg Crypto. In April two, the Central

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Speaker 1: African Republic decided that El Salvador shouldn't be the only

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Speaker 1: country making headlines as crypto friendly Car made bitcoin legal

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Speaker 1: tender and followed up with attempts to mint its own token,

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Speaker 1: called the Sango Coin. We'll check in on how that's going.

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Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and

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Speaker 1: I Heart Radio. For more shows from I Heart Radio,

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Speaker 1: visit the i Heart Radio app, Apple Podcasts, or wherever

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Speaker 1: you get your podcasts. Send us your comments, questions, or

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Speaker 1: suggestions for the show to Crypto at Bloomberg dot net

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Speaker 1: or find us on Twitter. We're at Crypto. The supervising

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Speaker 1: producer of Bloomberg Crypto is Vicky Verglina. Our senior producer

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Speaker 1: is Janet Babin. Our producer is Mohammed Farouk. Associate producer

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Speaker 1: is Moses on them Desta wonder At is our engineer.

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Speaker 1: Original music by Leo Sidrn. I'm Stacy Marie Schmal. We'll

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Speaker 1: be back tomorrow